Quantum Theory of Economics


Despite their successes, conventional economic theories have very serious limitations. They cannot account for economic reality on the quantum scale. The economy of a country is the totality of a myriad quantum economic interactions. These indivisible quanta are what gives rise to the aggregate measurements of conventional economics -- money stock, money reserves, fund position, liquidity, exchange rates, interest rates, claims on governments, claims on the private sector, export/import volumes and prices, unemployment rates, deficit or surplus, net borrowing, debts, GNP, GDP, etc. The connections and links between the economic quanta of daily life (the truly "microscopic" scale) and the macroscopic aggregates of economics are missing. At the small-scale level, the private economic transactions of the marketplace are, ideally, uncoerced and random -- reflecting the stochastic desires and free will of the citizen. But the marketplace is anything but uncoerced and free. We buy food because we need food to survive. The fact that we are free to choose between bread or bagel, beef or pork, etc., is material. But it is much less so if agribusiness or the food distribution channels are owned and controlled by a few. People do not lease or borrow because they are free to do so. They lease or borrow because they often have no choice but to. Worse, the options to lease or borrow are often limited by the coherent and collective behavior of financial institutions. Capitalist mythology tells us that economic freedom is the condition sine qua non of political freedom. But when the marketplace unconceals itself as the locus of massive coercive economic powers, there can only be one outcome: the corruption and perversion of freedom -- and of democracy. Despite the propaganda, the rigged heterogeneous marketplace is nothing but a sure road to economic dirigisme and totalitarianism.

How can capitalism corrupt and contaminate the freedom of whole populations? The champions of capitalism lecture us about freedom. But their theories rarely deal quantitatively with freedom -- the freedom to choose to be good or to be wicked. To the best of my knowledge, the tragic dimensions of what Kant called "radical evil"1 (wickedness, destruction, suffering, misery, etc., rooted in evil maxims) do not usually show up in the calculation of NPV. What happens to freedom in the limit of a very large number of usurious quantum transactions? There is plenty of empirical evidence corroborating the distortion of causality in the marketplace. Therefore, the imputation of economic responsibility and guilt is often tragically counterfactual. What kind of democracy do you have if money can indenture whole populations? if money can subvert freedom by manipulating or restricting the options of the electorate? Capitalism -- the dominion over Man as servitude -- cannot be the way "out of the house of bondage."2 Economics must capture quantitatively what everyone already knows -- that freedom to choose true evil cannot be divorced from economic transactions. The propensity to evil of the human will, which precedes acts,3 can infect each and every economic transaction. Not only can individual acts in the marketplace be evil, the ground of many rules and maxims can be insidiously corrupted.4 Ironically, radical evil in the marketplace often masquerades as meritorious virtue.5 Radical evil is not just contagious, it acts over long distances. In time, it can corrupt the moral predispositions of whole populations.6

The explicit treatment of freedom to choose good or evil is missing from current economic thinking. Economic outcomes are not just profit or loss, or surplus or deficit. When whole populations are indentured, the tragic loss of freedom cannot be dismissed as mere illusion. Surely, a positive NPV for a few quasi monopolies must not just mean fear, destruction, suffering, misery, and loss of freedom for the multitude. Such dangerous and blatant disregard in quantitative economics and finance of the human propensity for good and evil must be remedied. How? We must first understand how good and evil are created, transmitted, and propagated in the marketplace. We must understand how evil maxims corrupt freedom. For this, we must focus the full power of quantum theory on the problems of economics and law.

Physicists have long known that quantum theory provides the best description of physical reality on a small scale.7 But can a theory of matter, space, and time describe economic reality? My answer is "yes." Why? Because the mathematical framework of quantum theory is mental, not material. Quantum theory can unconceal economic reality -- from the quantum scale (the individual quantum transaction) to the macro scale (national economies and the global economy). How can quantum transactions (e.g., credit line arrangements) be related to measurable aggregates (e.g, the number of bankruptcies)? This path has already been opened in physics. The answer is to use Niels Bohr's correspondence principle.8 Conventional theories of economics (CTE) come in two flavors: macro-economic and micro-economic. The first deals with large-scale objects (regions, countries, continents); the other with smaller objects (projects, firms, factories, etc.). To my mind, a quantum theory of economics (QTE) can deliver much more:

  1. Hegel's theory of Lordship and Bondage9 can be used to incorporate freedom explicitly in the quantum states of individuals, corporations, and economies. The configuration space of economics can fix explicitly the direction of freedom to do good.
  2. Kant's theory of radical evil can be a starting point for modeling the structure of evil in the marketplace. The non-local effects of flawed distributions of bank-money can be analyzed in terms of the creation and destruction operators of quantum mechanics. A quantum-mechanical description of the dynamics of economic entanglement10 can be developed. The effects of macroscopically observed entangled states (e.g., following indenture through usury) can be analyzed. The 'spooky' action at a distance11 (opposed in physics by Einstein) of quantum economic entanglements with usurers can then be understood and quantified.
  3. The whole mathematical framework of quantum theory can be used. Economic systems can be conceived as many-body systems. The strong and weak force fields of economics can be identified and parametrized. The collective excitation models of nuclear physics, plasma physics, ferromagnetics, etc., can be used to model the collective behavior of financial institutions (e.g., when they simultaneously overinvest in commercial real estate).
  4. Bohr's correspondence principle can be used to connect QTE and CTE in the limit of large quantum numbers.12 For example, in the limit of large numbers of credit arrangements, we may be able to predict: changes in the concentration of wealth, from the cohesive or collective behavior of financial and other institutions, etc.; and losses of freedom, from economic entanglements, morally evil maxims of the marketplace, etc.
  5. Bohm's concept of implicate order13 can be used to predict how collective changes in the distribution or density of money (including bank-money) unfold and propagate through the economy. The study of the effects of changes in the distribution of bank-money on the possible economic paths of borrowers can have substantial legal consequences, especially, if scientists discover that causality has been maliciously distorted in the marketplace. The imputations of the causality of failures to destabilized firms may well prove to be counterfactual.14

Roger Penrose has explored the idea of a model for a mind,15 and suggested that there are connections between quantum theory and the brain. David Bohm wrote: "our most primary experience in consciousness actually is of an implicate order."16 Bohm is right; but his idea is too limiting. Experiential consciousness is, in addition, of the freedom of the will -- the freedom to choose between good or evil (including the freedom of will to create and destroy an implicate order). All else is natural17 or deterministic. Therefore, the idea of a quantum theory of economics must capture the essence of economic Being. The configuration space (Hilbert space) of such a quantum theory must coincide with the economic reality of Being.

What is this Hilbert space? Hegel's philosophy of lordship and bondage provides the answer: Man's self-consciousness of being is split into being-for-self and being-for-another.18 Being-for-self is the dimension of lordship; being-for-another is the dimension of bondage. Man as lord holds Man as bondsman in subjection. Man as lord occupies the state FREE; and Man as bondsman occupies the state SLAVE. Using Dirac's bra notation,19 the state FREE is denoted by |F>, and the state SLAVE by |S> (see notes below). By analogy with quantum mechanics, the wave function |Y> of a system (consisting of one or more persons, corporations, States, etc.) can be expressed as a linear superposition20

|Y> = a|F>+b|S>.

The weighting factors a and b are the probability amplitudes of states FREE and SLAVE, respectively.

Most people believe that slavery has been eradicated in the West. So why incorporate slavery in the quantum theory of economics? The answer is simple. Following Aristotle,21 a man is a slave (that is, in the pure state |S>) when he or all his economic output belongs, not to himself, but to another person, a corporation or the State. By extension, a person is indentured if a portion (from 0% to 100%) of his economic output belongs to another person, a corporation, or the State. With the exception of a small group of capitalists, most people exist in a state that is a mixture of the two basic states. The states FREE and SLAVE are clearly independent and orthogonal:

<F|F> = 1, <S|S> = 1, and <F|S> = 0.

The Hegelian absolute certainty of the moment of Being is expressed mathematically as <Y|Y> = 1 (this is explained below):

<Y|Y> = (a*<F|+b*<S|)(a|F>+b|S>) =

a*a<F|F>+a*b<F|S>+ab*<S|F>+b*b<S|S> = a*a<F|F>+b*b<S|S> =

|a|2+|b|2 = 1,

where * denotes complex conjugate, and | |2 denotes squared modulus. The probability that a person is in the state FREE is given by

PF = |<F|Y>|2 = |a<F|F>+b<F|S>|2 = |a|2.

The probability that a person is in the state SLAVE is given by

PS = |<S|Y>|2 = |a<S|F>+b<S|S>|2 = |b|2.

Thus, the extent to which a person is INDENTURED is given by the ratio

|b|2 / |a|2.

Given the current massive debts of the populations of the United States, of Canada, etc., we must conclude that the ratio |b|2 / |a|2 for these populations must be large. The SLAVE dimension of our Being as being-for-another in the so-called liberal democracies is of great concern.

Quantum Theory. In quantum mechanics,22 the "motion" of a particle or a system is described by a wave packet. The packet is a function of location r and time t, or of momentum p (mass times velocity) and time t. By analogy, the "motion" of an economic entity can be described by a wave function of location and time, or of momentum (of money) and time. A particle can be subject to many forces. The quantum mechanical particle can be conceived as moving in a field V(r) of forces. Each force field Vi(r) manifests itself as a force Fi(r)

Fi(r) = -ÑVi(r),

where Ñ is the gradient (the partial derivatives with respect to the space coordinates x, y, and z). The total force field and the total force are the sums (denoted by S) of the constituting fields and forces, respectively:

V(r) = SiVi(r)

F(r) = SiFi(r).

In many-body systems, the potential force field can be a complex function of ri, rj, pi, and pj:

V(r) = SiVi(ri)+SiSjVij(ri,rj,pi,pj).

By analogy, we can conceive of an economic entity as being subjected to a variety of forces. The economic system can include many interacting bodies -- governments, big banks, business sectors, landlords, suppliers, borrowers, etc.

In quantum mechanics, every dynamical state can be associated with a vector (a quantity characterized by a magnitude, a direction, and a sense or helicity). Following Dirac, each ket vector |Y> can be associated with its mirror image, or complex conjugate bra vector <Y|. The wave function can be expanded as a linear superposition of basic quantum states. The collection of all the possible basic quantum states constitutes the configuration space (or Hilbert space) of the wave function. As wave, the general state of a particle with spin up or down, can be written as a linear combination (superposition) of the form:

 |Y> = c1|á>+c2|â>,23 

where c1 and c2 are weighting factors, |á> denotes the state spin up, and |â> the state spin down. The weighting factors are complex factors or amplitudes of the form x+iy, where x and y are real, and i is the imaginary root of -1. All measurable quantities are calculable from equations of the form

A|Y> = a|Y>
<a> = <

where A is the operator corresponding to the measurable quantity, and <a> is the quantity's expected value. In other words, the quantity <a> is the mean value of the dynamical variable represented by the operator A, when the system is in state |Y>. The equation A|Y> = a|Y> can have a finite or an infinite number of solutions. Physicists and mathematicians refer to the solutions |Yi> and ai as eigenvectors and eigenvalues of A, respectively. The operators corresponding to position, momentum, angular momentum, and energy are, respectively:

r ® r,
p ® (-ih/2p)Ñ,
L ® (-ih/2p)rxÑ, and
E ® (ih/2p)/t,

where h is Planck's constant, Ñ is the gradient, and /t is the partial derivative with respect to time. The operator corresponding to the energy of a system is known as the Hamiltonian of the system. It has two components, a kinetic energy component T, and a potential energy component V:

H = T+V.

The wave function |Y> of a system must satisfy the Schrödinger equation

H|Y> = E|Y>.

Similarly, the wave function of an economic system must satisfy the Schrödinger equation of economics. Once the components of the Hamiltonian are specified, the Schrödinger equation can be solved for |Y> and E. For this, economists must first identify and parametrize the components of V. The energy of the system is calculable from

E = <Y|H|Y>/<Y|Y>

With the proper interpretation of the Schrödinger formalism, the whole machinery of quantum theory can be used to describe both "micro" and "macro" economic interactions. There is no reason why the whole framework of quantum theory (Hamiltonian H, U operator, S-matrix, etc.) or the notions of quantum statistical ensembles (Fermi-Dirac, Bose-Einstein,24 etc.) cannot be used in economics. For example, the U operator

U(t,t0) = 1-i(2p/h) ò H(t)U(t,t0)dt

can be used to describe the time evolution (from time t0 to time t) of the economic state vector. The S matrix, defined by

S = U(+¥,-¥),

can be used to calculate the amplitude of the transition from an initial state |i> ("before" an economic interaction) to a final state |j> ("after" the economic interaction). In nuclear physics, the S matrix is used to encode nuclear structure and energy dependence information. In QTE, it can be used to encode economic structure and energy dependence information (energy as potential for work25). The economic field forces (and the associated potentials) will have to be discovered and parametrized. This will not be easy, but well worth the effort. We might be surprised. Economic structure information, like nuclear structure information, can be extracted from resonances associated with metastable economic states. Gravitational, electromagnetic, nuclear, Coulomb, and other forces, might have economic analogs; in which case, the tools for investigating particle, nuclear, atomic, molecular, and chemical reactions can be adapted in toto to the study of economic interactions.

The "merger" of a big bank A with a smaller trust company B, can be represented by the reactions

A + B ® A',
A + B ® A' + Sei,
A + B ® A' + C + Sei, etc.,

where A' denotes the amalgamated bank, Sei dehired employees, and C a divestment. The reactions can be compound or direct. They can be characterized by coalescence rates, decay rates, transition probabilities, cross-sections, etc. The evolution of the business cycle can be described by linked reaction chains involving a variety of economic bodies (the State, big banks, big business, small and medium enterprises, and individuals). We should not be surprised if economists discovered that the business cycle is nothing but harmonic oscillations caused by the coherent or collective behavior of Capitalists. Once quantified, economic coupling factors and measures of cohesive or collective behavior (as when banks and speculators simultaneously overinvest in commercial real estate or in mutual funds) will undoubtedly be used to quantify lender liability (if any).

Speculations on the Mysterious Origins of Quantum Theory. Where do these ideas of quantum theory come from? According to Roger Penrose, the two most important ingredients of quantum theory -- probability theory and complex numbers -- can be traced to Gerolamo Cardano (1501-1576).26 But where do the deeper metaphysical origins of these ideas lie? I suspect the origins lie in the mystery of our "universal experience."27 Hegel believed that all universals -- 'I', 'Now', 'Here', 'This' -- "do not have a continuing being, or are not."28 What does this mean? Consider Now, for example. No sooner than you can point to Now, this Now ceases to be. But Now having been, is not. It is only by negating Now's negation as having been that we recover 'Now' is. This movement,-- from Now to Now having been to Now is --, is a movement of consciousness.29 It is what reveals Now as "an absolute plurality of Nows."30 It is what apprehends an immediate thing as "something that is reflected into itself."31 Following Hegel, one must distinguish between two moments that occur -- "that which perceives and that which is perceived."32 These moments are related "as opposites." This "pure relating of self to self" is the essence of 'thinghood'" -- "the unity of the Thing with itself."33 What does this have to do with quantum theory? In quantum theory, consciousness perceives the oneness of a Thing as self-certainty. Mathematically, this is expressed as

<Y|Y> = 1.

The norm <Y|Y>=1 means "certainty that has become truth."34 The Thing, which is represented by the vector |Y>, is reflected back into itself. It is first reflected as complex conjugate <Y| of itself, then the complex conjugate <Y| is reflected back onto |Y> itself. Hegel revealed the secret meaning of "universal experience" as follows: "Consciousness . . . reflects itself out of this movement back into itself as the True; but, qua consciousness, converts this truth again into an objective inner, and distinguishes this reflection of Things from its own reflection into itself: just as the movement of mediation is likewise still objective for it."35 This mysterious movement of consciousness may also be what accounts for Understanding of "world" and "inverted world"36 --

protons and electrons,
magnetic north pole and magnetic south pole,
matter and anti-matter,
good and evil,
freedom and slavery, etc.

Could the two moments of consciousness that occur -- "that which perceives [the observer] and that which is perceived [the observed]"37 -- account for Heisenberg's uncertainty principle?

DxDpx ³ h/2p
DEDt ³ h/2p.

Quantum Enfoldment-Unfoldment. How is an implicate order enfolded? How does it unfold in time and space? In quantum mechanics, the wave function of a system at a given point r at time t is related to the wave function at all points r' at an earlier time t' through the equation

Y(r, t) = ò K(r-r', t-t') Y(r', t') dr'.

Bohm's notion of enfoldment and unfoldment is based on the following interpretation of the equation:38

  1. The region around a point r at time t enfolds the contributions from all points r' at earlier times t', weighted with the factor K(r-r', t-t') (Green's function).
  2. The region around each point r' at time t' unfolds into all the points r of space at later times t.

The weighting factor is called the propagator. It quantifies the way order gets propagated throughout the system. How does it do so? For an answer, let us look at the laws of contiguity (nearby action) and of antecedence (the cause precedes the effect) for a moment. Following Mario Bunge, these laws can be expressed mathematically as follows:39

E(r) = ò K1(r-r', t-t') C(r') dr' (Contiguity)

E(t) = ò K2(r-r', t-t') C(t') dt' (Antecedence)

where C designates the cause, E the effect, and K1 and K2 are weighting factors. Note that t must be greater than t'. A knowledge of the propagators K1 and K2 allows us to determine the space-time evolution of the effect, from a knowledge of the cause.

What are the propagators of finance? Consider the connection between a stream of payments C(t') and their future value FV(t) at a later time t. The future value is determined by the propagator K(t-t') through the equation

FV(t) = ò K(t-t') C(t') dt' (Future Value),

where K(t-t')=e-r(t-t') and r is the nominal interest rate. Following Bohm, the future value near t can be said to enfold the contributions from all previous times t'. Using Bohm's notion of implicate order,40 we can evolve a quantum theory of economics as follows:

  1. Economics can be analyzed in terms of quantum fields of money. The movement of money can be expressed mathematically in terms of money propagators.
  2. The waves of the business cycle are built up of contributions from every possible path for money in the economy.
  3. The business cycle is a recurrent enfoldment-unfoldment pattern. Its implicate order is determined by the distribution of money (including bank-money).
  4. The economic implicate order -- as money pattern -- has a deeper underlying order. The underlying mental ground of creation and destruction is determined by the movement of mind and consciousness (Hegel's being-for-self or being-for-another41). The mental ground for the destruction and predation components of the business cycle is what Kant called radical evil42 -- the seed from which the evil maxims and rules of the marketplace can grow.

Radical Evil and Quantum Entanglements. To meet the requirement of realism, QTE must satisfy several requirements. It must allow for the ubiquitous characteristics of the marketplace -- deceit, fraud, wickedness, malice, coercion, etc. (Given the importance of deceit in business affairs, we can hardly avoid postulating the existence of deceptons. The exchange of deceptons between two economic entities may explain the existence of fraud fields, which produce the fraud potential.) QTE must allow for subversion of reason and for radical evil -- defined by Kant as the propensity of the free will to opt for maxims (procedures or rules) which contravene moral law.43 It must allow for wickedness -- a "cast of mind" corrupted and perverted "at its root."44 Armed with such realism, QTE might explain or predict violations of moral law (physicists have discovered violations of parity in weak interactions). QTE might also make quantitative predictions of transfers of wealth (energy) -- from the poor to the rich, or vice versa. QTE must also account for economic entanglements. For example, an evil borrower can swindle a lender. Alternatively, an evil bank can deceive a small business owner and follow up with usurpations and abuses of commercial powers. Excessive cohesive or collective overinvestment behavior by banks and trust companies (e.g., in commercial real estate) can "cause" or unchain a recession, and can entangle the whole economy. A bank can be predisposed to throw off its cash resources problems and potential negative aftereffects onto small firms; following large-scale failures from overinvestments in commercial real estate, it can suddenly freeze, reduce, or call loans to small firms. An entanglement can involve a bank and a firm -- a two-body system represented by the quantum-mechanical 'and ' 45


It can also involve the firm's owner as surety or guarantor of the loan. The corresponding three-body system can be represented by


More complex combinations can involve the government (if the government is owed payroll taxes, or if the firm qualifies for R&D tax credits), other creditors, and their agents. In the case where the bank overinvests, entanglements can occur if the bank, low on cash, suddenly freezes, reduces, or calls the firm's loan; resulting quantum entanglements can give rise to a quantum jump for the state of the owner -- from SOLVENT to BANKRUPT.

When evil procedures entangle a large number of people, in the limit of a very large number of economic transactions, then disenchantment leads inexorably to War against radical evil -- "evil as power that binds . . . evil as reign."46


1 Immanuel Kant, Religion Within the Limits of Reason Alone, translated with an Introduction and Notes by Theodore M. Greene and Hoyt H. Hudson, with an essay by John R. Silber, 1934 and 1960, at 15-39 (The Radical Evil in Human Nature).

2 The ten commandments follow the message "I am the LORD thy God, which have brought thee out of the land of Egypt, out of the house of bondage" [Exodus 20:2].

3 Immanuel Kant, Religion Within the Limits of Reason Alone, translated with an Introduction and Notes by Theodore M. Greene and Hoyt H. Hudson, with an essay by John R. Silber, 1934 and 1960, at 23-27, especially 26.

4 Ibid., at 27-34 (Man is Evil by Nature), especially 32 and 33.

5 Ibid., at 33 (Kant's discussion of radical evil is general; it is not limited to the marketplace).

6 Ibid., at 34-39 (Concerning the Origin of Evil in Human Nature), especially 35, and 88-89 (Man Ought to Leave his Ethical State of Nature in Order to Become a Member of an Ethical COMMONWEALTH).

7 See Roger Penrose, Shadows of the Mind, 1994, at 237.

8 Niels Bohr, Z. Physik, 13, 1923, at 117 (cited in Albert Messiah, Quantum Mechanics, Volume I, September 1966, at 29).

9 G.W.F. Hegel, Phenomenology of Spirit (1807), translated by A.V. Miller, with Analysis of the Text and Foreword by J.N. Findlay, 1977, at 111-119 (Lordship and Bondage), and 343 (being-in-and-for-self and being-for-another).

10 Quantum entanglement in physics is discussed in Roger Penrose, Shadows of the Mind, 1994, at 245-246 (entanglement as violation of no long-distance 'influence'), and 290-296 (entangled states).

11 See David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 57 ('spooky' action at a distance).

12 See Albert Messiah, Quantum Mechanics, Volume I, translated by G.M. Temmer, September 1966, at 29.

13 For the concept of the implicate order, see David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 350-392 (Quantum Theory and the Implicate Order).

14 On counterfactuals in physics, see Roger Penrose, Shadows of the Mind, 1994, at 240, and 419.

15 Ibid., at 371-377 (A Model for a Mind?).

16 David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 383.

17 Kant distinguished three kinds of causality: (1) autonomous freedom (good disposition); (2) heteronomous freedom (evil disposition); and (3) natural freedom (non-moral or animal); see Immanuel Kant, Religion Within the Limits of Reason Alone, translated with an Introduction and Notes by Theodore M. Greene and Hoyt H. Hudson, with an essay by John R. Silber, 1934 and 1960, at cxxvi (diagram of stages in volition), and 23-27 (Concerning the Propensity to Evil in Human Nature).

18 G.W.F. Hegel, Phenomenology of Spirit (1807), translated by A.V. Miller, with Analysis of the Text and Foreword by J.N. Findlay, 1977, at 111-119 (Lordship and Bondage), and 342-343 (man as a "Thing"; being-in-and-for-self and being-for-another).

19 P.A.M. Dirac, The Principles of Quantum Mechanics, 3rd edition, 1947.

20 The idea of a matter wave for describing both matter and radiation originated with Louis de Broglie; L. de Broglie, Thesis, Paris, 1924 (cited in Albert Messiah, September 1966). For a discussion of linear superposition, see Roger Penrose, Shadows of the Mind, 1994, at 256-259 (The Basic Rules of Quantum Theory), and 263-264.

21 Aristotle, Politics, translated by Ernest Barker, revised with an Introduction and Notes by R.F. Stalley, 1995, at 13-14 (1254a13), and 16-17 (1255b16).

22 See Albert Messiah, Quantum Mechanics, Volumes I and II, translated by G.M. Temmer and J. Potter, respectively, September 1966; and Richard D. Mattuck, A Guide to Feynman Diagrams in the Many-Body Problem, 2nd ed., 1967, 1976.

23 In a Quantum Theory of Ethics, the wave function of an economic system (person, corporation, etc.) can be expressed as

|Y> = c1|G>+c2|E>,

where |G> denotes the state GOOD, and |E> the state EVIL. The probability of good and evil are |c1|2 and |c2|2, respectively.

24 Fermi-Dirac and Bose-Einstein distributions have been to used to model regional and urban planning; see, for example, J.N. Kapur, Maximum Entropy Models in Science and Engineering, 1989, at 349-357.

25 Roger Penrose, Shadows of the Mind, 1994, at 214 (energy as "potentiality for doing work").

26 Ibid., at 249-256.

27 Hegel's expression; see G.W.F. Hegel, Phenomenology of Spirit (1807), translated by A.V. Miller, with Analysis of the Text and Foreword by J.N. Findlay, 1977, at 65 ("universal experience").

28 Ibid., at 62 (universals).

29 See G.W.F. Hegel, Phenomenology of Spirit (1807), translated by A.V. Miller, with Analysis of the Text and Foreword by J.N. Findlay, 1977, at 79 (movement of consciousness).

30 Ibid., at 64 (Now -- absolute plurality of Nows).

31 Ibid., at 58, 64, 72-75, 87, and 110 (dialectic of "sense-certainty").

32 Ibid., at 67-79 (Perception: Or the Thing and Deception), especially 67 ("essence of perception").

33 Ibid., at 68 and 72-75 ("'thinghood'" and "unity of the Thing with itself").

34 Ibid., at 110 (certainty).

35 Ibid., at 74 ("the Thing is essentially reflected into itself") and 87 (consciousness).

36 Ibid., at 96 ("supersensible world").

37 Ibid., at 67 ("essence of perception").

38 David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 354-355.

39 See Mario Bunge, Causality and Modern Science, 1979, at 365-366 (Are Contiguity and Antecedence Essential to Causality?). According to Bunge, the three principles -- of contiguity, antecedence, and causality -- are independent from one another. The above mathematical formulation explains why Hume (whose phenomenalism is often mimicked by financial managers) was, in the words of Bunge, "behind his own times, being in fact pre-Newtonian." It also explains my criticism of the Humean interpretation of economic causality in Book II.

40 David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 350-392 (Quantum Theory and the Implicate Order).

41 G.W.F. Hegel, Phenomenology of Spirit (1807), translated by A.V. Miller, with Analysis of the Text and Foreword by J.N. Findlay, 1977, at 111-119 (Lordship and Bondage), and 343 (being-in-and-for-self and being-for-another).

42 Immanuel Kant, Religion Within the Limits of Reason Alone, translated with an Introduction and Notes by Theodore M. Greene and Hoyt H. Hudson, with an essay by John R. Silber, 1934 and 1960, at 15-39 (Radical Evil in Human Nature).

43 Immanuel Kant, Religion Within the Limits of Reason Alone, translated with an Introduction and Notes by Theodore M. Greene and Hoyt H. Hudson, with an essay by John R. Silber, 1934 and 1960, at 16-17 and 24-25, 30, and 32 (" . . . This evil is radical, because it corrupts the ground of all maxims . . . ").

44 Ibid., at 25 (wickedness as corruption and perversity of "the human heart").

45 For a discussion of the quantum-mechanical 'and ' (a tensor product), see Roger Penrose, Shadows of the Mind, 1994, at 287-289.

46 The quote is from Paul Ricoeur. Ricoeur analyzed Kant's idea of radical evil. He wrote: "[T]he supreme evil is not the gross infraction of a duty but the malice that makes pass for virtue what is virtue's betrayal. The evil of evil is the fraudulent justification of the maxim by apparent conformity with law -- it is the semblance of morality." Ricoeur contrasted the Kantian "ethical vision of evil" with the "'tragic' aspect of evil." The symbol of slavery coincides with the symbol of "evil as power that binds, of evil as reign." See Paul Ricoeur, The Conflict of Interpretations, edited by Don Ihde, 1969 and 1974, at 287-314, especially 302-304 (The Hermeneutics of Symbols and Philosophical Reflection: I, translated by Denis Savage; the translation first appeared in the International Philosophical Quarterly, Volume II, No. 2, May, 1962, at 191-218).






Radical Evil

"Radical evil" is the subordination a priori of the law to non-moral interests and incentives -- couched as virtue.2
The concerns of legislature are potentially many. The grounds of justice can be perverted or corrupted for the benefit of a few. Rules can be designed to entangle individuals unawares. Defective legislation and justice can be used to maintain a system of privileges and net advantages at the expense of the citizen, leading, inevitably, to inequities and monopolies.

Quantum Deceit

Banks control access to bank-money. They can refuse to extend credit to a firm without a personal guarantee from the owner. The banks' ability to call, freeze, or reduce demand loans with suddenness can create considerable uncertainty and instability for firms -- and entangle entrepreneurs.
Intentions and motives can be concealed. Concealed seeds of latent deceit are unconcealed experientially.3

Quantum Coherence
Collective Effects

Quantum coherence4 and parallelism in the behavior of banks can free banks from some important responsibilities; but they limit the choices and opportunities of customers.
Quantum coherence in the behavior of big business gives rise to collective quantum effects which cause the oscillatory behavior of the business cycle.

Implicate Order
Quantum Unfoldment

The structure and distribution of money, including bank-money, define the implicate order5 of the economy.
Changes in this implicate order propagate through the whole economy. A defective order (favoring excessive commercial real estate loans, sovereign loans, etc.) can destabilize whole sectors of the economy. Negative effects can travel within and across business sectors, giving rise to destructive non-local effects.6 The unfoldment (time-evolution) of the implicate order can result in the entanglement of spatially separate and independent7 small businesses and their owners.

Counterfactual Effects
Distortion of Causality
When excessive overinvestments by usurers and speculators are followed by a tightening of credit, many firms can be destabilized if their loans are called, frozen, or reduced by banks with suddenness. Many can then be bankrupted or victimized by economic predators.
Defective justice and ultrahigh concentrations of money can distort causality8 -- and, therefore, responsibility, accountability, and guilt -- in the marketplace.
If overinvestments are followed by large-scale economic collapses and bankruptcies, then the imputation of the causality of these failures to destabilized firms, or to time and chance, is counterfactual.
9 History unconceals the hidden intentions and motives of usurers and borrowers.
Table 5-1   Potential Quantum Entanglements Between Capitalists, the State, and Entrepreneurs

This is a partial list of possible quantum entanglements and their key characteristics.

Sources and notes:
1 Quantum entanglement in physics is discussed in Roger Penrose, Shadows of the Mind, 1994, at 245-246 (entanglement as violation of no long-distance 'influence'), and 290-296 (entangled states).
2 The notion of "radical evil" is due to Kant. See Immanuel Kant, Religion Within the Limits of Reason Alone, translated with an Introduction and Notes by Theodore M. Greene and Hoyt H. Hudson, with an essay by John R. Silber, 1934 and 1960, at 15-39 (Essay on "Radical Evil in Human Nature").
3 For the "philosophical comprehension of History" as successive unfoldments from the "seed," see Georg Wilhelm Friedrich Hegel, The Philosophy of History, translated by J. Sibree, with Prefaces by Charles Hegel and J. Sibree, and an Introduction by C.J. Friedrich, 1956, at 10 (the unfoldment of Spirit as "the ultimate result of History"), 18 ("the germ bears in itself the whole nature of the tree"), and 78-79 ("seed"; "Spirit comprehends within it all earlier steps").
4 For a discussion of quantum parallelism, quantum coherence, and non-locality, see Roger Penrose, Shadows of the Mind, 1994, at 351-352. For a discussion of collective excitations in quantum theory, see Richard D. Mattuck, A Guide to Feynman Diagrams in the Many-Body Problem, 2nd ed., 1967, 1976, at 10-11, and 227-237. For mathematical details of vibrational models of the nucleus, see J.P. Davidson, Collective Models of the Nucleus, 1968. For the quantum theory of harmonic oscillators, see Albert Messiah, Quantum Mechanics, Volume I, translated by G.M. Temmer, September 1966, at 432-461.
5 For the concept of the implicate order, see David Bohm, Wholeness and the Implicate Order, 1980. For a more technical presentation, see David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 350-392 (Quantum Theory and the Implicate Order).
6 On quantum nonlocality, see David Bohm and Basil J. Hiley, The Undivided Universe, 1993, at 57 (Einstein's objection to possible nonlocal implications of quantum theory as 'spooky' action at a distance), 140-145 (Bell's Inequality; local vs. nonlocal effects; and strong experimental corroboration of nonlocality found by Aspect et al.), 157-158 (On Objections to the Concept of Nonlocality); and Roger Penrose, Shadows of the Mind, 1994, at 245-249.
7 On quantum nonlocality, instantaneous 'influence,' entanglements of "spatially separated objects," etc., see Roger Penrose, Shadows of the Mind, 1994, at 245-249.
8 For a discussion of distortion of causality in physics see Roger Penrose; ibid., at 224-227.
9 Counterfactuals in physics, ibid., at 240, and 419.

[Copyright © 1998 by MACROKNOW INC. All rights reserved.]






Structure and Distribution of Bank-Money. Flawed distributions of bank-money can have catastrophic social and economic consequences. The collective motions of the banking system as a whole, and of bank-money in particular, can induce collective disturbances throughout the economy. Disturbances from parallel speculative overinvestments can propagate from one sector of the economy (e.g., commercial real estate or mutual funds) to other sectors (e.g., retail or the high-tech sector). A destabilized economy means, among other things, excessive personal, business, and government debts -- and excessive numbers of consumer and business bankruptcies. Many sound companies can be destabilized, then destroyed, by predatory practices of the marketplace.

Contracts and Personal Guarantees. Consent to personal guarantees obtained through misrepresentation or veiled deceit cannot be binding -- "extorted promises are void ab initio."*

Distorted Causality. When the marketplace distorts causality, the imputation of all the responsibility to borrowers is counterfactual. The doctrine of borrower responsibility must be debunked.

Lender Liability. Loans, like other products in the marketplace, must be safe and reliable. A fair marketplace for loans requires a Loan Safety Act.

* See John Rawls, A Theory of Justice, 1971, at 350-355 (The Duty to Comply with an Unjust Law), especially 351; and 342-350 (The Arguments for the Principle of Fairness), especially 343.



Big business leaders, bank leaders, and legislators, better heed Locke's warning:

". . . if a long train of abuses, prevarications and artifices, all tending the same way, make the design visible to the people, and they cannot but feel what they lie under, and see whither they are going; it is not to be wondered, that they should then rouze themselves, and endeavour to put the rule into such hands which may secure to them the ends for which government was at first erected . . ."*

* John Locke, Second Treatise of Government (1690), edited, with an Introduction, by C.B. Macpherson, 1980, at 113.


   Plate 5-1



F Small funding-limited firm
B Bank
ti Time of event number i
a Firm establishes a credit line
b Bank overinvests (e.g., in commercial real estate, sovereign loans, etc.)
c Collective behavior by many banks propagates economic disturbances throughout the economy
d1 Firm is negatively affected
d2 Bank is negatively affected
e Bank suddenly freezes, reduces, or calls the firm's loan
f Bank unconceals its intention to claim assets that were explicitly excluded from the firm's Security Agreement


Plate 5-1   
How to Destroy a High-Tech Firm: Quantum Entanglements in the "Knowledge Economy"

This Plate depicts a possible sequence of interactions between a high-tech firm F and a bank B. A diagram in the style of the Feynman diagrams of physics is used.1 In physics parlance, the firm and the bank form a two-body system. Real-life systems, however, are complex many-body systems, involving a very large number of interactions. Here, only a few interactions are diagrammed. The configuration of possible events includes many kinds of economic micro-interactions (e.g., self-interactions and higher-order interactions). These are not shown. Time events are indexed. At time t0, the firm is assumed to be sound, technology-rich, but funding-limited. The firm is assumed to possess innovative software technology and valuable products. Several possible quantum entanglements between the firm, the firm's owner, and the bank, are highlighted. The unfoldment of the interactions illustrates how latent deceit (if any) is ultimately unconcealed. The analysis of the diagram follows:

  1. At time t0, the firm enters the firm-bank economic system.
  2. At time t1, the firm negotiates a line of credit with the bank (interaction a). The firm discovers that access to loans is limited, and that security agreements provide significant net advantages to the bank. The available line of credit is substantially smaller than the market value of the firm's software. While the line does not expand much the opportunities of the firm, it can potentially be exploited to entangle the firm and its owner -- the credit line cannot be had without a personal guarantee from the firm's owner. The bank represents that the firm's software (as intangible) is of no value to the bank. This is of great concern to the owner. Could the bank's representation be transient? Must the owner protect his interests against the possibility (or inevitability) of a future reversal? To secure the bank's representation as true and permanent, the owner excludes explicitly all the firm's intangibles (present and future) from the Security Agreement. The representation is the fundamental grounding principle governing the relationship between the owner as guarantor, the firm as borrower, and the bank as lender.
  3. Between times t2 and t3, the bank overinvests in commercial real estate (interaction b). The proportion of loans that the bank channels into commercial real estate follows essentially the same pattern followed in previous business cycles.
  4. Collective overinvestments by banks and trust companies induce collective disturbances2 throughout the economy (diagrammed by c). The disturbances propagate to many sectors. In the language of quantum physics, the changes in the structure and distribution of money produce "density fluctuations" or "density disturbances."3
  5. Excessive speculation in commercial real estate is followed by a recession from time t4 to time t5. The economy suffers; per-capita GDP in constant dollars falls. Flawed variations in the density of money polarize the marketplace. The disturbances propagate and disturb many independent firms -- at a distance from commercial real estate. Non-local retarded effects disturb the firm (interaction d1). These also disturb the bank (interaction d2). The negative effects on the bank are revealed through a variety of liquidity, return, risk, non-accrual, share-trading, and default indicators. The following is observed: per-share cash resources in constant dollars falls; non-accrual loans increases; the rolling probability of default (implied by share prices) surges; the stock's rolling beta increases; etc. (For a comprehensive assessment of the performance of a bank, a whole range of holding periods and rolling windows must be used.)
  6. If the bank cannot reverse its liquidity problem fast enough, it can choose to throw its problem onto borrowers. At time t6, the bank, low on cash, reduces, freezes, or calls the firm's loan. By choking off credit with suddenness, the bank destabilizes many sound firms, including firm F (interaction e). The bank's action sends erroneous signals to other creditors. Instead of resolving the conflict with the firm, the bank opts to keep its options open -- but the owner wants to know what is lurking around the corner.
  7. At time t7, the bank demands its money from both the firm and the owner. If the bank issues simultaneously a Notice of Intention to Enforce Security on the firm's R&D tax rebates and software (the excluded intangibles), then, the concealed plan or deception (if any) that had laid latent since time t1 is unconcealed. An unscrupulous bank can follow up with coercive actions (directly or through agents) and with abuses of commercial powers. If the owner does not have the resources to fight back, the bank or its agents can attempt to misappropriate the firm's intangible assets without due process (interaction f).
  8. Following overinvestments by speculators and their bankers, the economy is destabilized. The number of consumer and business bankruptcies soars. Personal, business, and government debts soar. The country's safety net is threatened. A whole new class of beggars appears on the streets -- ironically, not too far from Automatic Banking Machines. But the bank announces gargantuan profits at time t8.

If gross abuses of authority and power destroy thousands of firms, deprive owners of their property, and restrict their freedom,-- exceeding the tolerated "limits of injustice"4 --, then lenders and legislators better heed John Locke's warning.5

Sources and Notes:
1 For Feynman diagrams, and associated concepts, propagator probabilities, and rules, see Richard D. Mattuck, A Guide to Feynman Diagrams in the Many-Body Problem, 1967 and 1976.
2 For collective models of the nucleus and associated mathematics for codifying empirical data, see J.P. Davidson, Collective Models of the Nucleus, 1968.
3 For polarization and collective excitation propagators, see Richard D. Mattuck, A Guide to Feynman Diagrams in the Many-Body Problem, 1967, 1976, at 226-237 (Collective Excitations and the Two-Particle Propagator).
4 See John Rawls, A Theory of Justice, 1971, at 350-355 (The Duty to Comply with an Unjust Law), especially 351.
5 John Locke, Second Treatise of Government (1690), edited, with an Introduction, by C.B. Macpherson, 1980, at 113.

[Copyright © 1998 by MACROKNOW INC. All rights reserved.]



Google Search
Macroknow Much Mind Mind Hat Brand New Law Web


Macroknow Inc. Indexes Educational Media
Macroknow Mind Indexes New
Brand Indexes (Coming Soon)
Macroknow Library
Brand New Law
(Coming Soon)
Analytical Services Business Media Books
Services Much Mind
Mind Chronicle

Ed's Favorite Quotations
World War III Against the Money Trust?
Bank-Induced Risks
Software Regional Media Legal
Time Platform (Coming Soon) Mind Hat Terms and Conditions

Please read carefully the Terms and Conditions [ Legal ] before accessing or using this Macroknow Website.

Copyright © 1998-2008 by Edward E. Ayoub. All Rights Reserved.
Copyright © 1998-2008 by Macroknow Inc. All Rights Reserved.

Digital Art Copyright © 1998-2008 by Edward Thomas Matthew Ayoub. All Rights Reserved.

Macroknow™, Macroknow BookView™, Macroknow i-Books™, Macroknow i-Services™, Macroknow WorldHood™, and the Macroknow logos are trademarks of Macroknow Inc.

Other product, service, or company names mentioned in this Web may be the trademarks of their respective owners.

MK-19980805-WW3. Last modified: 2012-01-04