Inflation, Unemployment and Capital Malformations

Bernard Schmitt was a full professor of Monetary Macroeconomics at the Universities of Burgundy (Dijon), France and of Fribourg, Switzerland. He was also the co-director of the Laboratory of Research in Monetary economics at the Centre for Banking Studies in Lugano, Switzerland. Among his main publications are: La formation du pouvoir d’achat, Monnaie, salaires et profits, Macroeconomic Theory, A Fundamental Revision, Théorie unitaire de la monnaie, nationale et internationale, La France souveraine de sa monnaie, External Debt Servicing. A Vicious Circle, and a number of contributions to collective books as well as papers published in peer-reviewed journals. English translation and introduction by Xavier Bradley, Université de Bourgogne, France. Alvaro Cencini, Università della Svizzera italiana, Switzerland.

Forward by Xavier Bradley and Alvaro Cencini

Forward by the Bernard Schmitt

GENERAL INTRODUCTION

Quantum time






Production and time



Expenditures and time



3.Production and expenditure constitute one unique event: the emission
PART I:THE FUNCTIONING OF THE DOMESTIC ECONOMY: FROM WAGES TO CAPITAL




From production to consumption: the creation and destruction of wages



Capital
PART II: THE DYSFUNCTION OF THE DOMESTIC ECONOMY: FROM CAPITAL TO CAPITALISM




The quantitative theory and the quantum theory of inflation



Inflation and unemployment have the same aetiology: empty emissions



The two benign cases of empty emissions or of inflation



It is precisely because fixed capital is the property of a non-person (the disembodied set of firms), that its amortization causes the malignant emissions



In most advanced capitalism, a third of the industries in the country issue empty wages



The malignant emissions and unemployment
PART III: THE REMEDIES USUALLY PROPOSED, THEIR INEFFICIENCY EVALUATED IN THE LIGHT OF THE THEORY OF EMISSIONS




Money does not circulate in the economy



Far from being independent from each other, global supply and demand are logically merged into one unique magnitude; only confusion in the mind can separate them



Inflation and unemployment are totally independent from the behaviour of economic agents
PART IV: THE SOLUTION IS IN THE DIVISION OF THE ACTIVITY OF BANKS IN THREE DEPARTMENTS. LIBERATED FROM EMPTY EMISSIONS, THE DOMESTIC ECONOMY FOLLOWS SAY’S LAW: IT ENSURES FULL EMPLOYMENT WITHOUT INFLATION




The division of banks in two departments



The economy equipped with a network of deposit banks all divided in three departments will be totally free from empty emissions
GENERAL CONCLUSION

The micro-macro distinction in economic analysis




Macroeconomics is the domain of absolute exchanges



Confrontation between the two paradigms: absolute exchanges, relative exchanges



The determination of wages



The circuit, macroeconomic concept par excellence, is the identity of income’s outflow and inflow

SYNOPSIS OF QUANTUM MACROECONOMICS

1. Production and time

2. Production and expenditures

3. Measurement in the economy and in economics

4. The creation of money

5. Capital

6. Inflation is a "malformation" of capital

7. At the core, inflation is caused by the systematic dysfunction of fixed capital’s amortization

8. Production of the second sector, inflation is defined in quantum time; its measure in continuous time does not let the magnitude of the disorder become apparent

9. Involuntary unemployment would necessarily be nil if the domestic economy did not include any dual production

10. Neither inflation nor unemployment would exist in an economy where all the monetary capital would transit through financial markets

Glossary of the Main Concepts

Afterword

Appendix

Afterword by Henri Guitton

Bibliography

Index