AI and L. circuits diagram
Lowell Cochrane
re...@yahoo.com
--
You received this message because you are subscribed to the Google Groups "Lonergan_L" group.
To unsubscribe from this group and stop receiving emails from it, send an email to lonergan_l+...@googlegroups.com.
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK6y6KDxfhhW8qYMiMeGPJb3w5xdFO-T0g75u52AAEzqVQ%40mail.gmail.com.
Doug Mounce
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/598585608.3027450.1749765941583%40mail.yahoo.com.
Lowell Cochrane
so, I ran it in automatic and it stayed in equilibrium until it maxed out. So in the end the temporal dynamics lines all look flat, and all numbers stop increasing. Can you explain what the numbers represent? If they are money, then there should be a certain amount of money in the system distributed through the circuits, with new money coming in somehow but not this exponential increase that we currently see in the simulation. can you explain the meaning of the numbers and consider if we are simulating this correctly?
You're absolutely right to question this! The current simulation has a fundamental flaw in how it represents Lonergan's model. Let me explain what the numbers should represent and how we need to fix the simulation.
What the Numbers Actually Represent in Lonergan's Model:
In Lonergan's circulation analysis, the numbers represent flows of money per unit time (like dollars per month), not static amounts. Think of it like water flow through pipes:
- Outlay (O', O"): Money spent per period on production (wages, materials)
- Income (I', I"): Money received per period by workers/firms
- Expenditure (E', E"): Money spent per period on goods
- Receipts (R', R"): Money received per period from sales
- Production: Physical goods produced per period
The Key Insight We're Missing:
Lonergan's model is about velocity and circulation, not accumulation. Money doesn't pile up - it circulates. The same dollar can flow through the system multiple times. Growth comes from:
- Increased velocity of circulation
- Productivity improvements (more output per dollar)
- Pure surplus income - genuine new value creation
- Credit creation - new money entering appropriately
What Should Actually Happen:
The "Pure Cycle" isn't about exponential monetary growth but about phases of reorganization:
- Equilibrium: Steady circular flow
- Expansion: Capital investment increases (diverts flow from consumption)
- Income Generation: New capital creates more income flow
- Crossover Coordination: Optimal balance between circuits
- Proportional Growth: Both circuits expand together
Why Our Simulation Fails:
- We're treating outlays as accumulating stocks rather than flows
- We're not modeling the circular nature properly
- Money appears from nowhere instead of circulating
- Phase transitions aren't based on the right dynamics
What We Need to Change:
- Fixed money supply that circulates between circuits
- Velocity changes to represent growth
- Productivity multipliers to show real growth
- Credit injection at appropriate phases
- Phase detection based on flow patterns, not size
Would you like me to redesign the simulation to properly represent Lonergan's circulation model? The key would be showing how the SAME money moves faster or more efficiently through the circuits, rather than money magically multiplying.
this sounds good, but I think there is a component of Lonergan's model where new money does come in, either via central banks or other investments. Otherwise the economy would be static overall, no? If that is the case, please research to make sure we know if this is true and how it comes in, so if we need a new element in the flow to account for this.
You're absolutely correct! Lonergan does indeed account for new money creation in his model. Based on the research and reviewing the documents you provided, here's what we need to understand:
Lonergan's View on Money Creation:
From the first document: "The quantity of money infused by the Central Bank must be properly calibrated to serve the normative requirements of the actual magnitudes and frequencies of turnovers in the productive process"
Lonergan warns: "Our contention is that a large discretionary injection of "free money" into the channels of Demand -- whether by the Fed or the Treasury -- rather than as "money justified" through the channels into productive supply, [(S'-s'O') and (S"-s"O")], is intrinsically inflationary."
How New Money Enters in Lonergan's Model:
- Credit Creation by Banks: Modern research confirms that "commercial banks are the main creators of the money supply" through lending, not just intermediating existing deposits
- Central Bank Operations: Through asset purchases and monetary policy
- Pure Surplus Income: This is Lonergan's key insight - genuine new value creation through productive innovation and efficiency gains
What We Need to Add to Our Simulation:
- A Credit Creation Node:
- New money enters through productive lending
- Should connect to both circuits based on loan purpose
- Rate varies by phase of the cycle
- Pure Surplus Income Flow:
- Represents genuine productivity gains
- Emerges during expansion phases
- Must be properly distributed
- Monetary Drainage:
- Loan repayments destroy money
- Savings that don't recirculate
- This prevents infinite accumulation
The Correct Dynamic:
The economy isn't static because:
- Velocity changes: Same money moves faster/slower
- Credit expands/contracts: New money created for productive purposes
- Productivity increases: More output per unit of money
- Pure surplus emerges: Real value creation through innovation
Would you like me to redesign the simulation with these proper money creation and destruction mechanisms? The key is showing how new money enters appropriately through productive channels rather than just inflating the system.
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CALaFOMujZN%3DrqM_LGoX-Ktjm5_f%2BOm5WefZVxvAnOUZMET05sA%40mail.gmail.com.
Doug Mounce
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK4h33f50DxNdPEYWwx4kspFENRbv9y%2B0Uf1LKeNJqxraA%40mail.gmail.com.
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CALaFOMttn-Cc_DoaYgTuJA5XP-nrV-5%3DuEpxFY0%2BjFN-KDUjPQ%40mail.gmail.com.
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CALaFOMttn-Cc_DoaYgTuJA5XP-nrV-5%3DuEpxFY0%2BjFN-KDUjPQ%40mail.gmail.com.
Doug Mounce
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK4qkJpTNOOhctSCOweVy80i69Ljt6M1%2BTSv5QXZfb57qw%40mail.gmail.com.
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CALaFOMsXw9jiQMr9Qmk266BRFA7RvH25VqBKSow3-pTTBUvJyw%40mail.gmail.com.
John Raymaker
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/909799816.1658246.1750709382811%40mail.yahoo.com.
Pierre Whalon
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK4rOuqHT6zO%3D2OZDDHqQ2MHZ3iXqj8YtvOEJ%2BPjAmeX9A%40mail.gmail.com.
Hugh Williams
John and Pierre et al,
No, John’s and Pierre’s recent book (Attentive, Intelligent, Rational, Responsible, 2023 (AIRR)) is not an easy read … however, I’m increasingly persuaded it is a must read, especially for serious Lonerganians with strong Western and Christian sympathies. Let me give four reasons for this (admittedly this is an emerging and developing argument, but one that must be considered …)
1) For Christians who use Lonergan to think about their Christianity in today’s world, they will recognize there being something to what I’m calling the Rahnerian-Gilsonian ‘evangelical’ concern about a tendency in Lonerganian thought that tends to overlook or forget the ‘specificity’ of Christianity. (Perhaps it is the Africans who may have something especially relevant to say on this …)
2) However, Lonergan, I believe, has addressed this specificity in his Christology which leads to a careful and extraordinary re-consideration of the Trinitarian superstructure in Christian doctrine, where the Spirit’s role and work can now be considered as significant as that of the ‘Son’. In my own view, this has some Scriptural basis as well because of the two fundamental doctrines of ‘the bodily ascension’ and ‘the descent of the Holy Spirit (Paraclete)’. Fred Crowe, in his treatment of Lonergan’s Christology, draws these insights out from Lonergan’s theology in a very powerful and relevant manner, in my view.
3) This then may return some of us to Dominic Crossan’s complaint (as well as Phil McShane’s) directed at N.T. Wright’s, perhaps, hyper-focus on the bodily resurrection doctrine … and how practically we still will be faced with the questions of its effective ‘meaning for us’ and of ‘what practical difference’ it is going to actually make for us … especially in todays’ complex world given our present circumstances and the desperate and time-sensitive need/necessity for 'us' to move from 'personal authenticity' to some semblance of ‘communal authenticity’ by way of the two communal conversions – in economy and in ecology insistently articulated in AIRR’s GEM-FS methodology.
4) This as I see it is the powerfully timely context for Raymaker’s and Whalon’s ambitious text and its proposed project, along with its high relevance, at least for the Christian side, for any ongoing Christian-Marxist dialogue, especially with Chinese Marxists, especially today in our present Geo-political circumstances …
see this link for some background on at least some of the significant, exciting, and even hopeful theoretical and policy work being done in China from the Marxist side … https://monthlyreview.org/2024/10/01/marxist-ecology-in-china-from-marxs-ecology-to-socialist-eco-civilization-theory/
thanks again
(please let’s have a little feedback on these 'wild thoughts' …)
Hugh
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAB318C2-01AE-4D6D-AC57-DD7F756D2B78%40gmail.com.
Hugh Williams
Lowell, John, Pierre, Doug et al,
This note from Lowell is, in my view, a strikingly fresh and important email to, and viewpoint for, this Lonergan- discussion-group and beyond …
This use of AI, as recounted, is a new development and should (note to self!) not be dismissed. Personally, I do not use it. I will confess to being somewhat of a luddite and yet do recognize the irony of confessing this on this communication medium.
Nevertheless, I’ll intersperse further comments on this good email note in the body of the text below at ‘HW’ …
thanks
Hugh
|
Subject: |
Re: [lonergan_l] AI and L. circuits diagram |
|
Date: |
Tue, 24 Jun 2025 13:25:42 -0400 |
|
From: |
Lowell Cochrane <lowell....@gmail.com> |
|
Reply-To: |
|
|
To: |
I have to admit I am a complete amateur in this domain. Part of why I began to look at LB's economic theory again was the confluence of world affairs, a generational criticism of our current "system", and recent elections in Canada. Add to that, a desire to know if LB's theory was really something that could provide a solution, or if it was an artifact of its time, or if its critical insights were already a part of modern economics. Perhaps all of these questions reveal the uncertain nature of my own knowledge - I can read LB's text and summaries thereof, but not really knowing well enough the theoretical basis of modern liberal economics, I don't feel I compare properly to make any judgements. So using AI was a way (in my leisure time) to ask those questions of the AI agent (one that is fairly powerful). However, I understand perfectly that this route can't sidestep proper understanding of the topics, if only because one has to judge the answers given by AI. So what I have done is a start, and a bit of fun.
HW: Your use of AI in L studies is a new and important development that should not be dismissed. As for being a complete amateur, … most of us would have to admit to still be learning when it comes to this Canadian thinker of considerable standing in the history of ideas. Personally, I’m trained as a philosopher and not an economist, and it is through philosophy that I’ve come to consider Lonergan and his theory of economy. However, with the help of both Phil McShane and Michael Shute and a few others, I’ve tried to learn as much as I can of L’s economics. I like to believe I know my strengths and limitations in this regard, and yet often need the assistance and dialectical interchange with others.
All that being said, I think I can say that with Michael Shute, some seven years ago now, I’ve had some direct experience trying to confront the issue of the ‘testing and implementation’ (see attached) of L’s theory of economy in the jurisdiction of NB where I live. I will not go into the details here but I will say that I’ve witnessed firsthand the (rhetorically) violent reactions of academic economists to L’s economic proposals. On the other-hand I’ve also witnessed a general openness and curiosity around the ‘implementation’ challenge by a few applied economists and accountants responsible for public policy. Was it a passing fleeting curiosity? Perhaps, … nonetheless, John’s and Pierre’s good text (AIRR, 2023) renews the discussion and debate (the controversy) and does so on a global level in a more pressing and urgent historical context … So please, let us not give up on the question, nor on the inquiry that you’ve undertaken.
That being said, I was quite excited by the results, in that the AI agent seemed able to compare and contrast, and hone in on key differences. What I don't know is if the AI agent is simply parroting those sentences from its online research that seemed relevant to my questions. However, I feel there is more to it than that. I forget the exact phrasing, but I believe LB stated one of the goals of his economics to speak plainly to plain people, as without the democratic institutions to support it, it would be no different than the current technocratic systems of expert-run economies (be they socialist or liberal economies). I was also impressed by the response it gave when I asked what institutions in Canada come close to the idea of LB meant by radical democratic controls.
HW: I’d like to hear more on your AI findings re. institutions that might support ‘radical democratic control’ … It is pretty clear to me that with L’s economic theory we are facing what is often called a paradigm shift that has some analogies for economy with what happened in the shift from the Ptolemaic view to the Copernican view in astronomy. My academic economist bristled with anger at the prospect that L’s economic theory might have that level of speculative significance for the field of economics. He had to settle down a bit when I pointed out that part of Copernicus’ motivation to pursue a different theoretically systematic outlook was the fact that astronomers at the time simply did not agree among themselves in their various astronomical investigations. This often has been the experience among economists, though there is a strong tendency to coverup or downplay the significance of this. It is true that practically Ptolemy’s theory and calculations are still relied upon in certain restricted areas of concern because, as with some sailors, they are still deemed to be simpler and more functional for certain limited applied purposes. However, most conscientious inquirers who take seriously the signs of the times will not deny that our economic development models require a fundamental re-thinking, and that the field of economics in many quarters has been engaged in some serious degree of self-criticism in recent years. Nonetheless, the discipline of economics is naturally highly protective of its status and remaining authority. But this, in my view, really is a matter of what remains of its present cultural status and is no longer one of its actual speculative and theoretical reliability.
My urge to pursue it further is partly based on my son's comments about the failures of the economy in terms of opportunities for his generation, in particular the transformation of certain things like homes (basic circuit goods) into investments, and other ways that wealth moved from the many to the few systematically as they distort "natural" circuits.
HW: This is exactly my point above, or at least is significantly supportive evidence for it …
What would be most enlightening is if someone with a far deeper understanding of CWL15 and 21 could point out glaring errors in what I forwarded this far.
John, I'm unsure of the full meaning of your responses, but one point I could make is that taking an all or nothing approach in implementing GEM-FS as a precondition of progress is surely doomed to failure. Society has failed largely to just get people to buy into the truth of the atmospheric greenhouse effect, let alone make any headway in mitigating GHGs. But that isn't really a surprise - we only have to look at our own journeys' just trying to appropriate LB's thought and one's own dynamics to realize it is a series of baby steps, most of which are purely under the agency of individuals and not imposed (taught) from the outside to any lasting effect. Like the economy, the climate will likely have to undergo a true crisis before humanity, as a whole, re-thinks its positions and has the will to work at it. But we can prompt and nudge, if only ourselves.
HW: We do have to realize that L’s major contribution as GEM-FS is methodological. It is both an individual and collective methodology that is dynamic. Arguably what is at stake in its implementation is the more or less effective application of our intelligence, not just individually but also collectively, in the face of the civilizational challenges in both economy and ecology. I do think we in the West presently confront special challenges in such application. GHGs and the political-economic issues surrounding these are a case on point. There are what can be called capitalist driven forces and lobbies that have worked and continue to work very hard to resist necessary policy changes and to effectively obscure our public understanding of the issue. And it is much more than a matter of personal change and effort. It has also to do with moving from personal authenticity to communal authenticity, and so will be a matter not only of ‘personal virtues’ but also one of meaningful ‘governance, policy, legislation, and law’. This in part is why I keep raising the Christian-Marxist-dialogue-context, with special and new attention to the work of Chinese Marxist scholars in this whole area. I also believe it can aide us in a serious reading of John’s and Pierre’s good text and, as I’ve come to see it, in coming to recognize some of the significant advances it makes in this regard …
… and one final point in response to your excellent email … I’ve recently fantasized about a virtual seminar (time limited) sponsored by this Lonergan-discussion-group for some of us to meet one another virtually and to discuss further John and Pierre’s AIRR and this question of both ‘testing and implementation’ …
Again, keep up the good work …
Hugh Williams
After having sent my last post responding to Lowell's June 24 email ...
I now see this earlier email and its attachment which I only now have just read.
(I've tended to avoid AI generated stuff as I indicated in my
earlier email.)
(I basically will leave the symbolic representations which comes at the end to the logicians and mathematicians
to consider ... though I must add here that I believe that there is a deep epistemological and metaphysical
issue as to the relationship between such symbolization and what I'd call our existential reality. It has to do
with the question of so-called isomorphism in Lonergan and the question of 'similarity' between thought and reality.
I'd also dare say it has something also to do with what John and Pierre call in their text L's twofold heuristic - classical and statistical.
Dare I say further that this deep philosophical issue having to do with the relationship quality and quantity,
also bears upon Marx's theory of value and John and Pierre's treatment of this in their AIRR text.)
... I found overall nothing that would be considered grossly in error. There are subtle minor things here and there that I might rephrase or add.
The many allusions to the coop movement in Canada as the closest historical examples of 'Lonergan-like' implementation
is very significant for me, and I believe, again, does support my appeal for a renewal of the Christian-Marxist dialogue to sort out
some of the lessons of history in this regard and the realistic pointers for the future movements ...
Hugh
-------- Forwarded Message --------
| Subject: | [lonergan_l] AI and L. circuits diagram |
|---|---|
| Date: | Thu, 12 Jun 2025 16:23:32 -0400 |
| From: | Lowell Cochrane <lowell....@gmail.com> |
| Reply-To: | loner...@googlegroups.com |
| To: | Jaraymaker via Lonergan_L <loner...@googlegroups.com> |
|---|
Lowell Cochrane
My prompt: Lonergan aside, can you assess the question based on research into current theory. I don't want to assume the Lonergan position that there is only a single circuit in the modern framework, I want to know how a modern economist who has never heard of Lonergan would answer that question.
AI response:
Based on my research into current modern economic theory (setting aside Lonergan), here's how a mainstream economist who has never heard of Lonergan would answer the question about monetary circuits:
Modern Economic Theory: One Primary Circuit with Multiple Sectors
A modern economist would typically describe the economy as having one primary circular flow of money, but organized across multiple sectors rather than multiple independent circuits. Here's their framework:
The Standard View: Five-Sector Circular Flow
The complete circular flow has five sectors: a household sector, a firm sector, a government sector, a foreign sector, and a financial sector. Circular Flow of Income - GeeksforGeeks The five-sector model consists of (i) households (the public sector), (ii) businesses, (iii) government, (iv) the foreign sector, and (v) the financial sector. 6.12 The financial sector: A summary and overview – Macroeconomics
Single Integrated System
Modern economists view this as one interconnected system where:
- Unified Flow Logic: The circular flow model demonstrates how money moves endlessly from producers to households, then back from households to producers. It factors into a country's gross domestic product (GDP). The Circular Flow of Income
- Sectoral Interactions: The flows of money among the different sectors of an economy... accounting rules tell us that the flow of money in must equal the flow of money out. Chapter 5 Money, Banking and the Financial Sector | Macroeconomics
- Equilibrium Focus: As long as lending (injection) is equal to borrowing (leakage), the circular flow reaches an equilibrium and can continue forever. 6.12 The financial sector: A summary and overview – Macroeconomics
Key Theoretical Framework: DSGE Models
The dominant modern approach uses Dynamic Stochastic General Equilibrium (DSGE) models, which:
Dynamic stochastic general equilibrium modeling (abbreviated as DSGE) is a macroeconomic method which is often employed by monetary and fiscal authorities for policy analysis, explaining historical time-series data, as well as future forecasting purposes. Dynamic stochastic general equilibrium - Wikipedia
At their core, DSGE models are built on microeconomic principles. They assume that individual agents (households, firms, governments) optimize their decisions over time in the face of random shocks. The equilibrium achieved when these optimized decisions interact across sectors of the economy forms the basis of DSGE analysis. The Guide to DSGE Models in Macroeconomics
Banking and Financial Sector Integration
Modern theory does recognize some complexity in money flows through the financial sector:
However, it is necessary to distinguish between the bank rate and the lending rate that is set by financial institutions. It is the lending rate that is important for economic agent financial decisions. The Circular Flow of Income
The financial sector—banks, other financial intermediaries, and financial markets—provides the foundations for debt and money, both crucial to a modern economy, and allows households to invest (often via financial intermediaries) in a much wider range of productive (but risky) assets. Bu
The Answer: One Circuit with Sectoral Flows
A modern economist would say there is one monetary circuit that flows through different economic sectors. They would emphasize:
- Sectoral differentiation rather than functional circuits
- Equilibrium maintenance across all sectors
- Aggregate relationships (like GDP = C + I + G + (X-M))
- Optimization by rational agents within the unified system
Alternative: Post-Keynesian Recognition
However, some heterodox economists do recognize multiple flow concepts. Monetary circuit theory is a heterodox theory of monetary economics, particularly money creation, often associated with the post-Keynesian school. It holds that money is created endogenously by the banking sector, rather than exogenously by central bank lending. Understanding the circular flow model in modern economics
But this remains outside mainstream thought, which continues to operate with the unified circular flow paradigm.
Summary
A mainstream economist would answer: One primary monetary circuit that flows through five interconnected sectors (households, firms, government, foreign, financial), with all flows ultimately part of a single equilibrium system governed by rational optimization and general equilibrium principles.
--
You received this message because you are subscribed to the Google Groups "Lonergan_L" group.
To unsubscribe from this group and stop receiving emails from it, send an email to lonergan_l+...@googlegroups.com.
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/a04d1562-dd1a-4d26-8e7f-522ca61dd3e0%40nbnet.nb.ca.
PIERRE WHALON
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK4J4XRVpjeziQC4nB4RJPXtmUXms0WkDyv5cGQFALMWCg%40mail.gmail.com.
Lowell Cochrane
Assessment: Related but Different
Similarities to Lonergan:
- Recognition that bank credit creation is central to economic dynamics
- Understanding that different types of credit flows serve different functions
- Awareness that static equilibrium models miss essential dynamics
Key Differences:
- Schumpeter's model is sequential (static periods interrupted by innovation), not simultaneous dual circuits
- Schumpeter focuses on entrepreneurial disruption, while Lonergan focuses on systematic circuit balance
- Schumpeter's cycles are about creative destruction, while Lonergan's are about functional coordination
Conclusion
Schumpeter did not develop a dual circuit approach like Lonergan's. While he recognized the importance of credit creation, the functional differentiation of credit types, and the dynamic nature of capitalism, his framework was fundamentally different. Schumpeter saw innovation as periodically disrupting a static circular flow, rather than identifying two simultaneously operating circuits with different temporal functions that require systematic coordination.
The connection exists in their shared emphasis on credit creation and monetary dynamics, but their analytical frameworks and policy implications are quite distinct.
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/58681EE5-DA0A-4CB7-815C-A47D2633DCD7%40aol.com.
Hugh Williams
Listers all,
In our attempts to discuss political-economy again – by way of John’s and Pierre’s book (AIRR, 2023), or by way of reading Lonergan’s CWL 21, or by trying to gradually adhere together to some virtual seminar that would follow the most simplified and humble version of Insight’s arduous and (even painful) methodology when actually attempted of 1) beginning with our most relevant personal experience (story) of economy, 2) trying to interpret and understand this experience, 3) trying to assess and judge with others one’s level of confidence in the truth of one’s own account, and then 4) discerning on the basis of the ‘knowledge’ findings or outcomes from, what would not have been at all an easy first three steps or moments in the process, what action might be possible individually or collectively. (AIRR, p.40)
When one seriously considers such a proposal then one begins to appreciate a cautionary note to one’s study of economy where serious advertence to real world illustrations are urged (AIRR, 2023, p.209). There is and has been a strong passion for the mathematization of economic thinking that needs to be tempered and balanced with actual historical studies (something Marx and Marxism has tended in certain quarters to excel at in my humble view). It is not just because of the distorting ideological bias that can enter into such measurements and calculations, but because of the compelling mathematical intrigues that often are of little consequence and of interest only to economic specialists, and perhaps gives some veneer of being scientific without actually being able to effectively address the complex and very messy problems and issues of economy and ecology that we face today. This is not the concern and complaint of a philosopher from outside the field of economics but the reiteration of what comes from within the field itself and has been recently articulated by Thomas Piketty.
The authors, after various attempts at rigorous systematization in terms of GEM-FS based ultimately on Lonergan’s economic thinking, in combination with the rich contributions from many others, suggest in Part IV of AIRR how this effort in systematic methodology might actually be used in addressing the many challenges we now face. They begin with the disarming admission that the GEM-FS approach is not a fully developed theory (p198). Instead, it should be taken as an approach that is more of a guide or aide for learning what needs to be learned (a heuristic) rather than as a theory in any strict sense. Nevertheless, if it should be taken up with this understanding, it will involve some discernment of GEM-FS’s healing potential – “a radical healing potential”.
They say this because Lonergan’s theory of economy requires what is awkwardly called an anti-egalitarian investment in the surplus economy for the sake of innovation. However, once this capital surge is exhausted a basic expansion is meant to follow with the raising of the standard of living for everyone. Justice then requires that the movement of capital beyond ordinary profit be directed to innovative projects that can help raise the standard of living for everyone.
It is in Part IV of the text (AIRR, 2023) that the authors go to work in drawing the last four functional specialties (FS – foundations, doctrines, systematics, and communications)) into their discussion. It will be a discussion of non-coercive foundational democratic measures that are intended to lead to viable economic policies systematically and adequately communicated. It is an effort to invoke levels of personal and communal commitment necessary for transcending previous horizons even (or more aptly, especially) in economics.[1]
This is expressed in terms of MiT’s second mediated healing phase where the authors say there will even be a need for apophatic insights. This GEM-FS methodology in its search for economic justice may well mean the adoption of a basic income for all with stress on income equality by gender and race. This would be the role of the redistributive function.[2]
Thanks again
Hugh
[1] It is perhaps in fn.99 p.38, with reference to a previous work on Climate Change from ten years ago in the background and providing some context, where the authors most tersely and straightforwardly express the urgency of their appeal and effort, and it bears repeating here in this short commentary on the latter stages of the text – “GEM-FS gives us the needed criteria to explain why in these apocalyptic times of drastic change, conversion-turnarounds can develop viable policies across the globe to save what can be saved.”
[2] If I were to tell of my own experience of economy, a central element would be about working directly for what is known in my Western Nation and province as ‘pay equity’, a major 'cause' for redistribution of wealth. All that needs to be said at this stage as a type of ‘witness’ is that as a heuristic guide for this type of real concrete historical struggle which has been both complex and messy extending over at least some fourteen years, Lonergan’s theory of economy (along with that of Marx), and now this GEM-FS has been both a guide and aide. This has been so for me personally and beyond this personal witness … I can say that the transcendentals of intentionality ‘be attentive, be intelligent, be rational/reasonable/realistic, and be responsible’ as a basis for authentic collaboration with others has been taken up by others, and has been denied by none …
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/58681EE5-DA0A-4CB7-815C-A47D2633DCD7%40aol.com.
Hugh Williams
Listers all,
A correction is needed for the first part of the first line of the third paragraph in the email below -
it should read
'The authors, after various attempts at rigorous systematization in terms of GEM-FS based ultimately on Lonergan’s economic thinking fused with his philosophical-theology from both Insight and MiT ...'
with apologies
Hugh
| Subject: | Re: [lonergan_l] AI and L. circuits diagram and GEM-FS |
|---|---|
| Date: | Thu, 26 Jun 2025 15:56:00 -0300 |
| From: | Hugh Williams <hwil...@nbnet.nb.ca> |
| Reply-To: | loner...@googlegroups.com |
| To: | 'PIERRE WHALON' via Lonergan_L <loner...@googlegroups.com>, loner...@googlegroups.com <loner...@googlegroups.com> |
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/2c847c9d-b72d-44d9-89ef-bb7875bc182a%40nbnet.nb.ca.
Doug Mounce
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK7U8LLrJofHCCCCBLTVyQYp%3DnCO%2BuSEg5QzptjqXySSxQ%40mail.gmail.com.
Lowell Cochrane
The Redistribution Component (R) - Current Implementation and Lonergan-Aligned Improvements
Understanding Lonergan's Redistributional Function
Theoretical Foundation
According to Lonergan, the redistributional function (R) represents money engaged in non-productive exchanges - transfers that don't directly contribute to production or consumption. This includes:
- Asset trading: Buying/selling existing real estate, stocks, commodities
- Financial speculation: Trading for price appreciation, not productive use
- Wealth transfers: Inheritance, gifts, gambling
- Secondary markets: Any exchange of existing assets rather than new production
The key insight: R is not merely a "holding tank" but a functional component that can either support or undermine the productive economy.
Current Implementation Analysis
What's Working
- Basic Structure: The simulation has R as a separate pool tracking non-productive money
- Inflow Mechanism: Money flows into R during speculation phases
- Composition Tracking: Tracks real estate (50%), stocks (35%), commodities (15%)
- Phase Sensitivity: Different flow rates based on economic phase
Critical Weaknesses
1. Random Outflows
typescript// Current implementation if (phase === 'SURPLUS_EXPANSION' && Math.random() < 0.2) { // 20% chance money flows back }
Problem: This randomness doesn't reflect Lonergan's insight that money returns to production for specific economic reasons.
2. No Asset Price Dynamics
- R composition is tracked but prices never change
- No bubble formation or crashes
- No feedback between speculation and productive economy
3. Weak Economic Integration
- R flows don't respond to:
- Circuit imbalances
- Investment opportunities
- Liquidity crises
- Asset overvaluation
4. Missing Functional Relationships
- No connection between R size and economic stability
- Pure surplus allocation doesn't affect R
- Credit creation ignores R dynamics
Lonergan-Aligned Improvements
1. Asset Price System
Implement dynamic asset pricing that reflects both fundamentals and speculation:
typescriptinterface AssetMarket { realEstate: { priceIndex: number; // Current price (base 100) fundamental: number; // Fair value based on economy momentum: number; // Rate of price change speculativeRatio: number; // Speculation vs real demand }; // Similar for stocks and commodities }
Key Dynamics:
- Prices rise when money flows into R (speculation increases)
- Fundamental values track productive economy health
- Bubbles form when price >> fundamental
- Crashes occur when bubbles become unsustainable
2. Intelligent Outflow Triggers
A. Asset Crash → Forced Liquidation
When asset bubbles burst, money is forced back into production:
typescriptif (assetPrice / fundamental > 1.5 && momentum < 0) { // Bubble bursting - liquidation begins const panicSelling = R * crashSeverity * 0.3; // Money flows to whichever circuit needs liquidity }
B. Investment Opportunity → Voluntary Redeployment
When productive investment becomes more attractive than speculation:
typescriptif (surplusROI > speculativeReturns && capacityUtilization > 0.85) { // Redirect speculation to productive investment const productiveRedeployment = R * opportunityAttractiveness * 0.1; // Flow to surplus circuit O" }
C. Circuit Imbalance → Stabilizing Flows
When circuits are severely imbalanced, R can provide stabilization:
typescriptif (circuitRatio > normativeProportion * 1.5) { // Surplus circuit too large - support basic circuit const rebalancingFlow = R * imbalanceSeverity * 0.05; // Flow to basic circuit receipts }
D. Liquidity Crisis → Emergency Support
During contractions, R can provide emergency liquidity:
typescriptif (phase === 'CONTRACTION' && employment < 0.85) { // Release speculative holdings to support employment const emergencySupport = Math.min(R * 0.2, liquidityGap); // Flow to basic circuit outlay }
3. Speculation Feedback Loops
Positive Feedback (Bubble Formation)
typescript// Rising prices attract more speculation speculationInflow = baseRate * (1 + assetMomentum * contagionFactor); // Success breeds excess if (assetReturns > productiveReturns) { flowToR *= (1 + returnDifferential); }
Negative Feedback (Self-Limiting)
typescript// Overvaluation increases crash probability crashProbability = Math.pow((price / fundamental - 1), 2); // Speculation drains productive capacity if (R / totalMoney > 0.25) { productivityPenalty = (R / totalMoney - 0.25) * 0.5; }
4. Integration with Other Components
With Pure Surplus
Democratic decisions about pure surplus should affect R:
- High reinvestment → reduces speculation (better returns in production)
- High distribution → may increase speculation (more disposable income)
- Public goods → reduces need for private speculation
With Credit System
Credit should consider R dynamics:
- High R → restrict credit (speculation risk)
- Low R → expand credit (productive capacity available)
- R composition → affects credit terms
With Phase Detection
R should influence phase transitions:
- Rising R during expansion → warning sign
- Falling R during contraction → recovery signal
- R volatility → phase instability indicator
5. Enhanced Visualization
R Node Enhancements
- Size: Proportional to balance
- Color: Green (low speculation) → Yellow → Red (dangerous)
- Pulsing: Rate indicates flow velocity
- Composition Ring: Show asset allocation visually
Flow Animations
- Into R: Show money being "trapped" in speculation
- Out of R: Show "release" back to productivity
- Different colors: Voluntary (green) vs forced (red) outflows
New Metrics Display
- Speculation ratio (R/Total)
- Asset bubble indicators
- Crash probability meter
- Productive vs speculative returns comparison
Implementation Roadmap
Phase 1: Asset Price Foundation (Week 1)
- Create asset price data structure
- Implement fundamental value calculations
- Add momentum tracking
- Create price update logic
Phase 2: Intelligent Outflows (Week 2)
- Replace random outflows with triggers
- Implement crash detection
- Add opportunity recognition
- Create emergency flow logic
Phase 3: Feedback Systems (Week 3)
- Implement speculation contagion
- Add bubble dynamics
- Create crash mechanics
- Test self-limiting behavior
Phase 4: Integration (Week 4)
- Connect to pure surplus system
- Enhance credit decisions
- Update phase detection
- Refine visualizations
Expected Outcomes
Economic Behavior
- Natural Cycles: Speculation bubbles form and burst naturally
- Self-Regulation: Excessive speculation triggers its own correction
- Productive Priority: Money returns to production when needed
- Democratic Influence: Council decisions affect speculation levels
Learning Opportunities
Users will observe:
- How speculation can drain productive capacity
- Why bubbles are self-limiting
- How democratic allocation affects speculation
- The role of R in economic stability/instability
Conclusion
The current implementation treats R as a passive pool with random behaviors. Lonergan's theory shows R as an active force that can either support or undermine the productive economy. By implementing:
- Dynamic asset prices
- Intelligent outflow triggers
- Feedback loops
- System integration
We create a simulation that demonstrates Lonergan's crucial insight: speculation is self-limiting because it eventually undermines the productive base it depends on, forcing money back into productive use through market mechanisms rather than regulation.
This enhanced R implementation would make the simulation a powerful tool for understanding why purely financial economies are unstable and how democratic control of surplus can create more sustainable economic patterns.
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CALaFOMs%3DK0Mk9RgqKenxh_R8NudAiVB0mJ_K36VJGMGiaDqEFg%40mail.gmail.com.
Doug Mounce
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CAL7ChK60KfaM6LYYH1WxPTVT91w3PD%3DCmpPR%3Dua_7%2BmYSMfRaQ%40mail.gmail.com.
Lowell Cochrane
To view this discussion visit https://groups.google.com/d/msgid/lonergan_l/CALaFOMts3NztdMJ6aWzKO8j2g-vsAEA_RC_8%2BMXx1%2Bmu7FL8kg%40mail.gmail.com.