The aim of Bernard Schmitt’s analysis of the monetary economy of production was twofold: to introduce and to explain the logical character of the macroeconomic laws governing our economies and to explain the origin of the pathologies that follow if these laws are not complied with. Schmitt’s main original contributions concern the theories of value, profit, and capital, as well as his explanation of inflation, unemployment and international payments, unified as quantum macroeconomic analysis. This book expounds on the key principles of quantum macroeconomic analysis as he conceived and developed them.
Schmitt’s starting point was the analysis of bank money and the way it is associated with produced output. His macroeconomics was not founded on microeconomics nor derived from the aggregation of microeconomic variables. Schmitt’s theory does not rely on mathematics and modelling either; instead, it is based on logical laws derived from the nature of money and monetary payments. Part I of this book deals with the quantum macroeconomic analysis of capitalism and its pathologies developed by Schmitt and provides the elements necessary to understand its ‘structural’ mechanism. Parts II and III deal with the principles of two reforms that enable the passage from capitalism to post-capitalism and from the present non-system of international payments to an orderly system.
This book provides essential reading for all those interested in heterodox approaches to macroeconomics, monetary economics, banking, international economics, and the history of economic thought.
Author(s): Alvaro Cencini
Series: Routledge Frontiers of Political Economy
Publisher: Routledge
Year: 2022
Language: English
Pages: 482
City: London
Cover
Half Title
Series Page
Title Page
Copyright Page
Table of Contents
List of figures
List of tables
Acknowledgements
Foreword: A biographical note on Bernard Schmitt
Introduction
Schmitt’s contribution
The structure of the volume
Part I 1959–1987: The years of Schmitt’s greatest insights
A From money to capital
Chapter 1 The discovery of the true nature of money and the origin of its purchasing power
Schmitt’s starting point: Keynes’s equations
The nature of bank money and the formation of the purchasing power of money
Banks’ monetary and financial intermediation
Money and the logical relationship between production and consumption
Schmitt’s theory of bank money compared with orthodox and heterodox analyses
Chapter 2 The building blocks of a theory of national money: From Monnaie salaires et profits (1966) to Théorie unitaire de la monnaie, nationale et internationale (1975)
The logical relationship between wages and national income
Schmitt’s first explanation of profit is incomplete
Circular flow analysis or the theory of the circuit
The circular flow of nominal money and income in an economy of production
Schmitt’s profit and monetary circular flow analysis as compared to those of his contemporaries
Chapter 3 Schmitt’s critical analysis of neoclassical, Keynesian, Marxian, and Sraffian economics from 1959 to 1988
Schmitt’s first critical assessment of general equilibrium analysis (GEA)
The logical indeterminacy of relative prices
The shortcomings of Keynesian analysis
The critical appraisal of Marx’s analysis of value and profit
Critical analysis of Sraffa’s attempt at determining relative prices
The critique of Pasinetti’s theory of value
Chapter 4 1979–1984: The discovery of quantum time
Production and time
Expenditure and time
The theory of emissions
The quantum analysis of profit
A brief comparison with orthodox economics
Chapter 5 Quantum economics and capital
Ordinary versus quantum credit
From income to capital-time
The formation of fixed capital
The pathology of fixed capital formation
Classical, neoclassical, and Keynesian analyses of capital: a brief comparison with quantum analysis
Chapter 6 Schmitt’s 1984 explanation of inflation and unemployment and the principles of his 1984 reform
Inflation
Fixed capital amortization and inflation
Involuntary unemployment
Schmitt’s 1984 reform: principles and practical implications
Traditional and quantum analyses of inflation and unemployment: a brief appraisal
B From national to international money
Chapter 7 International payments as a cause of monetary disorders
The nature of international payments
Nominal and real international money
The inflationary nature of international payments
Schmitt’s analysis of international payments as compared to that of his contemporaries
Chapter 8 Schmitt’s first proposals for a world monetary reform
From relative to absolute exchange rates
Keynes’s plan for an international clearing union revisited
Schmitt’s 1970s proposals for a world monetary reform
The precursors of Schmitt’s solution to international monetary disorder
Chapter 9 Schmitt’s contribution to the debate on European monetary unification : 1975–1988
Schmitt’s alternative to the present European Monetary System
The advantages of Schmitt’s plan
Schmitt’s first proposals for a single-country reform
Settling a country’s net imports under Schmitt’s single-country reform
Part II 1987–1998: The years of further in-depth analysis
Chapter 10 1987–1995: Schmitt’s first extended analysis of countries’ external debt
International payments affect countries and their residents
The asymmetry characterizing the servicing of countries’ external debts
The impact of external debt servicing on debt servicing countries
The principles of Schmitt’s solution
Chapter 11 The analysis of capital and interest based on Schmitt’s unpublished manuscripts of 1993–1996
Schmitt’s first explanation of non-wage income
Towards a new explanation of interest
In the present system of payments, non-wage income is formed pathologically
A critical assessment of Böhm-Bawerk’s and Keynes’s analyses of capital and interest
Chapter 12 Schmitt’s new analysis of unemployment: His 1998 contribution
Unemployment is impossible in an economy where income is made up of wages and redistributed profits
Unemployment is impossible in an economy where all final expenditures are either consumption or investment
Amortization is not a direct cause of unemployment, but creates the conditions for its rise
Unemployment as the unavoidable consequence of capital over-accumulation
Chapter 13 The development of Schmitt’s criticism of general equilibrium analysis
GEA on the determination of relative and monetary prices
Introducing the numéraire, or money, will not help GEA to determine numerical prices
The crucial mistake of GEA
Chapter 14 From capitalism to post-capitalism
Capitalism
Y = C + I + A
Y ≡ C
Post-capitalism
Post-capitalism: a new phase in the evolution of capitalism or an entirely new regime?
Part III 1999–2014: The final years of ground-breaking analysis
Chapter 15 Towards the ‘interest theorem’: The double cost of interest payments
Presentation of the problem
First proofs of the double charge of the payment of interest on countries’ external debts
The peculiarity of interest payments
The Interest Theorem
A generalization of the interest theorem and its consequences
Chapter 16 The final criticism of general equilibrium analysis
The logical indeterminacy of relative and numerical prices in GEA
The neoclassical theory of relative prices determination is marred by a mathematical error
Prices and money
Chapter 17 The discovery of the pathological nature of countries’ sovereign debt (2010–2014)
The problem
The difference between country A’s monetary outflows and inflows is the cause of its sovereign debt
The ‘sovereign debt theorem’
Concluding remarks
Chapter 18 The one-country solution to the sovereign debt problem
The aims and principles of Schmitt’s reform
Before and after Schmitt’s reform: a useful comparison
The practical workings of Schmitt’s reform
Conclusion
Bibliography
Name index
Subject index
