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 byXavier Bradley, Université de Bourgogne, France. Alvaro Cencini, Università della Svizzera italiana, Switzerland.

• Forward by Xavier Bradley and Alvaro CenciniForward by the Bernard SchmittGENERAL INTRODUCTIONQuantum time Production and time Expenditures and time 3.Production and expenditure constitute one unique event: the emissionPART I:THE FUNCTIONING OF THE DOMESTIC ECONOMY: FROM WAGES TO CAPITAL From production to consumption: the creation and destruction of wages CapitalPART 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 unemploymentPART 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 agentsPART 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 emissionsGENERAL CONCLUSIONThe 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 MACROECONOMICS1. Production and time2. Production and expenditures3. Measurement in the economy and in economics4. The creation of money5. Capital6. Inflation is a "malformation" of capital7. 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 apparent9. Involuntary unemployment would necessarily be nil if the domestic economy did not include any dual production10. Neither inflation nor unemployment would exist in an economy where all the monetary capital would transit through financial marketsGlossary of the Main ConceptsAfterwordAppendixAfterword by Henri GuittonBibliographyIndex