INDETERMINACY
According to Lonergan:
“But despite this almost baffling indeterminacy,
it remains that there is a definite dynamic structure. There are hypotheses in which the game can go
awry; and this possibility constitutes a fundamental indeterminacy for the
structure. On that basis either by
adding further information about the nature of the game or by adding further
suppositions, a still greater determinacy may be built.” (CWL 21, 212)
Let us say that “indeterminacy” is, or at least
implies, fuzzy cognition. [“Fuzzy
cognition is described in the website of Guillermo Ochoa at URL http://www.ochoadeaspuru.com/fuzcogmap/index.php But can fuzzy cognition prevent the game from going awry? Not unless the fuzziness is eliminated or
reduced. In a democracy, all the
economic decision-makers must have knowledge that is determinate,
otherwise, their decisions would be based on mere speculation.
In 1996, it was observed that “well over 90
percent of all foreign exchange transactions are of a purely speculative
nature.” (Page 94 “The World’s Monetary
System: Towards Stability and Sustainability in the Twenty-first Century”, Vol.
4 of Rethinking Bretton Woods. ed. by J. M. Griesgraber & B. G. Gunter.) Such speculative activities created harmful
conditions on production and trade in
To eliminate or reduce this indeterminacy, Lonergan focuses on what is determinate and seeks its
relationship with what is indeterminate, or less determinate There results a hypothesis that distinguishes
between what is determinate (the “basic” stage) and what can be indeterminate
or less determinate (the “surplus” stage) of an economy. Although these two stages are distinct, still
they interact with each other. The interactons can be quantified by the pricing mechanism in
the payments for the production of goods and services. This pricing mechanism allows measurements of
the interactions. In turn, the
measurements reduce the fuzziness in the cognition of decision-makers.
The decision-makers can base their decisions
partly on the flows of payments between the two functions of outlay and income
of both the basic and surplus stages of an economy and partly on its
redistributive function. In Lonergan’s “baseball diagram”, these five functions are
illustrated as follows: the “redistributive function” (at the pitcher’s mound),
the “basic supply function (at home plate), the “surplus demand function” (at
first base), the “surplus supply function” (at second base), and the “basic
demand function” (at third base). The
“game” is played very unlike a baseball game, but it can “go awry”
The flows can be positive, zero, or negative, and
mean “so much every so often” like velocity.
When velocities change, there is acceleration, “so much more every so
often” or “so much less every so often”, positive, zero or negative. The accelerations are in dynamic equilibrium
unless the supply circuit is draining the basic circuit or vice-versa. When this drainage is not stopped, there is
dynamic disequilibrium: the game “goes awry.”
It is possible to detect the possible sources of
the drainage. Any one or more of the 14
flows can be the source. But which flow
or flows? This problem can be studied by
trying many computerized simulations and approximations that will lead to
isolating or narrowing down the sources of drainage. Still it is difficult to estimate the
intensity of human “adaptation” or “inadaption” to
the technical constraints of the circulation of payments and to the technical
constraints of supply and demand.
I read the FCM example of grasslands and herbivores with only
two factors. Lonergan’s
macroeconomic dynamics has 15 factors.
Of these, 5 are diagramed by the pitcher’s mound, the homeplate and the 3 bases.
The other 10 quantify the velocities and accelerations of the flows
between the other five.