OriginsThe origins of quantum economics can be traced back to the works of prominent economists of the past. Quantum economists refer to Adam Smith’s distinction between money and money’s worth promoted in his Wealth of Nations:
|“||The great wheel of circulation is altogether different from the goods which are circulated by means of it. The revenue of the society consists altogether in those goods, and not in the wheel that circulates them. In computing either the gross or the net revenue of any society, we must always, from their whole annual circulation and goods, deduct the whole value of the money, of which not a single farthing can ever make any part of either.||”|
|“||In the form of money, all properties of the commodity as exchange value appear as an object distinct from it, as a form of social existence separated from the natural existence of the commidity.||”|
|“||The only qualities necessary to make a measure of value a perfect one are, that it should itself have value, and that that value should be itself invariable, in the same manner as in a perfect measure of length the measure should have length and that length should be neither liable to be increased or diminished; or in a measure of weight that it should have weight and that such weight should be constant.||”|
|“||The prevalence of the idea that savings and investment, taken in their straightforward sense, can differ from one another, is to be explained, I think, by an optical illusion due to regarding an individual depositor’s relation to his bank as being a one-sided transaction, instead of seeing it as the two sided transaction which it actually is.||”|
 Fundamental ConceptsThe following concepts are cornerstones in quantum economics.
 Absolute ExchangeAn absolute exchange is an exchange of an object with itself (as opposed to a relative exchange, an exchange of two different objects). We can exemplify this unusual phrasing by considering a wage payment. When firms pay wages, wage earners receive a bank deposit. Assuming, for simplicity, that the firm pays wages by contracting a new loan with the bank, this new asset in the bank’s balance sheet exactly matches the bank’s liability with wage earners. Wage earners receive a positive purchasing power because their credit with the bank has a real object – the newly produced output. Wage earners' income therefore does not exist independently of output; it is the numerical form of output, its expression in terms of units of accounts. In this sense, in the payment of wages output in its physical form exchanges for output in its numerical form (income), in what quantum economists call an absolute exchange.
 MoneyQuantum economists argue that the circulation of money is an instantaneous event, as money is essentially a flow in the form of a double-entry in the bank's ledger. Quantum economists separate the definition of money from the definition of security. They define money as a flow-reflow in payments. Since in all transactions an agent is both a seller and a purchaser (for example, when purchasing a good, the purchaser buys a good and sells a security, e.g. a bank deposit), any time there is a payment in one direction there is simultaneously an equal payment in the opposite direction. Thus, any time a positive amount of money flows in one direction (money creation), it simultaneously reflows back (money destruction). Money therefore never exists in continuous time, according to quantum economics. However, since the flow of money expresses the transaction in units of account, money has a relevance in continuous time; for example, reconsidering the example of wage payments, it gives a measure in terms of units of account to output, whose existence as a bank deposit in continuous time is a matter of empirical evidence.
 ProductionBy economic production, quantum economists mean the attribution of a numerical form to output. Through the payment of wages, money is associated with output, giving rise to economic value. From this point of view, money is an instantaneous flow, which results in a sum of bank deposits that are the monetary definition of current output. The deposit owned by wage earners has purchasing power because it is the monetary form of output.
 Identity between supply and demandQuantum economists hold that output acquires an economic valuation in the payment of wages. It then follows that the numerical measure of output held by firms (supply) is identical to the numerical measure of the income of wage earners (demand). Demand and supply are therefore identical by quantum logic. What is not purchased on the goods market is entirely lent on the financial market through banks. Global supply is the measure of current output, which equals the macroeconomic costs of production.
 Quantum TimeAccording to quantum macroeconomic analysis, physical output, and hence the amount of time needed to physically produce it, is emitted the instant economic production takes place. In this sense, economic production quantizes time. This philosophical idea of quantum time sums up two main tenets of quantum economics: that wages are the unit of measure in economics, and that production (and its opposite – consumption) is an instantaneous event.
 Monetary Pathologies
 InflationInflation is the situation where aggregate demand numerically exceeds aggregate supply. This situation is at odds with the logical quantum identity between demand and supply – inflation is pathological. To have inflation there must be some money devoid of purchasing power, which quantum economists call empty money. The origin of inflation is closely connected with capital accumulation. By marking up prices over costs of production, firms earn a profit. In the process wage earners transfer part of their purchasing power over produced output to firms. Firms’ owners may then use profits either to consume or to invest. In the first case, firms’ owners spend income on the goods market and income is thereby destroyed. In the second case, they invest income by financing the production of fixed capital goods. The payment of wages being financed by a pre-existing income, it implies the purchase of fixed capital goods by firms. This is a final purchase of output, which therefore destroys income. However, current systems of payments do not recognize this fact, and allow banks to lend on the financial market the deposits formed following the investment of profits. Logically, the income invested by firms is transformed into fixed capital, and should therefore no longer be available on the financial market. This not being the case, an ‘empty’ sum of money pathologically increases the demand for produced output: there is a nominal demand not matched by an equal supply (inflation). Quantum economists emphasize that inflation and its effect – the pathological accumulation of capital – is a macroeconomic disorder that does not stem from the behavior of economic agents. The root of the problem lies in the current accounting system of banks, which allows inflation to arise.
 Involuntary Unemployment and DeflationQuantum economists consider involuntary unemployment as a macroeconomic pathology. Unlike micro-founded theories of unemployment, quantum economists state that involuntary unemployment is a macroeconomic disorder independent of people’s behavior. Inflation causes capital over-accumulation as empty money emissions lead to inflationary profits for firms, which can in turn spend them finance the production of fixed capital goods. Firms must also pay the cost of capital – the market rate of interest – out of profits. Quantum economists then argue that, as the amount of fixed capital goods grows persistently, at some point the ratio between profits and capital must fall. As the margin or the gap between the rate of profit and the market interest rate falls, firms will then either invest less, or use their profits for the production of consumer goods. In the first case, national production suffers, thus causing a positive measure of involuntary unemployment. In the second, firms supply an amount of consumer goods for which there is no associate demand (deflation).
 Exchange Rate VolatilityThe national principle that every time a bank makes a payment for any clients, money is simultaneously created and destroyed, holds at international level as well. However, current systems of payment consider currencies as objects of trade. For example, consider an importer from nation A (denote A’s currency as MA) purchasing a product from an exporter in nation B (denote B’s currency as MB). A’s banking system pays banks in B x units of MA and debits the importer by the same amount. B’s banking system receives a claim to x MA from bank A and credits the exporter for an equivalent amount in MB, consistent with the current exchange rate. The importer in A has now paid the exporter in B, but the bank in B still owns a claim on a bank deposit recorded on the liabilities side of A’s bank. How does the settlement of debts and credits between the banks in A and B work out? There is no settlement, quantum economists hold. Although importers and exporters have been debited and credited, the payment has not been settled finally between the two nations, since there remains a promise from country A to pay country B in the future – nobody can finally pay a debt by promising to pay in the future. As a consequence, these claims can now circulate on foreign exchange markets, increasing the volatility of exchange rates. Quantum economists then argue that central bank policy is an ineffective weapon against these exchange rate fluctuations, which would disappear only under an accounting system reformed according to quantum principles.
 Proposals for ReformAll monetary pathologies conceived of by quantum economists can in principle be cured by reforming bookkeeping practices of banks and settlement institutions. The reforms proposed by quantum economists are not aimed at changing the behaviour of individuals, but would merely alter the way transactions are recorded by banks and settlement institutions. Quantum economists propose two reforms, which would get rid of inflation and deflation, involuntary unemployment and pathological volatility in financial markets.
 Reform of National Payment SystemsIn the reformed system of national payments, transactions are recorded in three separate departments.
I. The monetary department (department I) records all money emissions.
II. The financial department (department II) records all newly formed bank deposits.
III. The fixed capital department (department III) records the capitalization of profits.
The basic idea behind this tripartite structure of banks’ bookkeeping is the practical separation of money (department I), income (department II) and fixed capital (department III). The first two departments guarantee the separation between money – a valueless, numerical vehicle – and income – a positive bank deposit and the monetary definition of current output. Because banks can issue money without cost by the stroke of a pen and can thereby extend the assets and liabilities side of the balance sheet theoretically ad infinitum, an over-emission of money can occur. The separation will ensure that banks cannot lend more money than they have income deposited, thereby preventing a credit-led inflation. Banks will not be able to lend more than the amount of income generated by production. Thanks to this partition, bank directors would know at every point in time the exact amount of income they can lend to the public. The third department prevents the mix-up of income with fixed capital, which in the present system leads to the emission of empty money, the cause of inflation according to quantum theory. All profits, once formed in the market for goods, have to be transferred to the third department. Profits distributed by firms as dividends can be transferred back to the second department; what remains in the third department defines the amount of fixed capital formed in the economy. Fixing these profits in the third department of banks’ balance sheets shouldprevent firms from spending these deposits once again, which would give rise to an inflationary increase in prices.
 Reform of International Payment SystemsWhile national payments are processed with national currencies, international payments are still made with national currencies. Quantum economists argue that international payments would be best made using an international currency. To do so, they design an international clearing union that would issue an international currency. The international clearing union would settle credits and debts of the various national banking systems. Implementing a real-time gross settlement system between central banks, the imports of goods or services of one country would be immediately balanced by an equivalent export of goods, services and/or securities of the same country. This way, quantum economists argue, payments between nations would settle and money would assume its natural function of a circular and vehicular means of payment. This international clearing union was originally proposed by John Maynard Keynes:
|“||We need an instrument of international currency having general acceptability between nations (...); that is to say, an instrument of currency used by each nation in its transaction with other nations, operating through whatever national organ, such as a Treasury or a central bank, is most appropriate, private individuals, businesses and banks other than central banks, each continuing to use their own national currency as heretofore. ||”|
— (Keynes 1973, vol. XXV, S. 168)
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