Social crediters have been paying some attention to the work of "quantum economics", a theory of economics originally produced by Emeritus Prof Bernard Schmitt, departments of Monetary Economics at the Universities of Fribourg (Switzerland) and of Bourgogne (France). He has been joined by Prof Alvaro Cencini, Department of Monetary Economics at the University of Lugano (Switzerland).

 

 

For our purposes Schmitt’s analysis begins with the double-entry bookkeeping; applied to banking he showed that money is an instantaneous flow of payments to be carried out by the banking sector. Money is created every time banks make a payment - that is, credit is created ex nihilo, literally out of nothing. Money then cannot be a positive asset, being created out of nothing, but is purely a means of payment, like a ticket system, and has no positive value in itself.

 

Income is destroyed once it is spent on the final purchase of output, meaning that the neo-classical quantity theory of money (MV=PQ, where M is the money supply, V the velocity of circulation, P prices and Q quantity sold) is false. The assumption made here is that income is not destroyed when it is spent in the final purchase of the output, so that money "circulates" like water in the hydrological system. As both social credit and quantum economics maintain, money is issued against production, and then annulled as the goods are bought to be consumed. Hence there is in economic reality, no circular flow.

 

Social credit and quantum economics thus have much in common. There are differences insofar as quantum economics attempts to give a non-classical mathematical foundation to economics : see Ewa Drabik, "Classical and Quantum Physics in Selected Economic Models", Foundations of Management, vol.3, no.1, 2011. Here I am at the limits of my abilities but what I can work out is that in quantum mechanics classical determinism is abandoned and replaced by the Heisenberg Uncertainty principle which states that there is a limit to the accuracy possible in measuring certain physical variables simultaneously, such as the position and momentum of a sub-atomic particle such as an electron or a photon (light ray). As well, microphysical entities simultaneously have particle (i.e. localised) and wave-like (non-localised) properties, which is completely alien to classical physics.

 

Quantum physics also holds that observation affects the states of micro-objects. It is a product of the mathematical structure of quantum mechanics that until an observation is made of a quantum system, micro-objects exist in a superposition of states that is both A and not-A simultaneously! The observation in the experiment causes a collapse of the wave packet, producing a definite state. This is metaphysically puzzling to say the least, and has constantly disturbed physicists. Albert Einstein thought that quantum mechanics must be wrong and tried to refute it in the 1930s, but he failed and got egg on his face!

 

 

All of this material needs to be carefully examined by more competent social credit theorists than me. There may be unexpected useful things. In his paper "The Formation of Sovereign Debt, Diagnosis and Remedy", Schmitt argues that countries’ external debt may be twice as high as they should be because of monetary pathologies associated with finance by foreign loans. Perhaps this material could suggest a further critique of economic globalisation?

 

 

My guess is that social credit fits better into a "new physics" view of reality than neo-classical economics and orthodox finance, which seem to be highly mechanical and deterministic, such as with their obsession with equilibria. But, the matter requires detailed examination by the experts.