I was recently invited to attend two academic workshops. The first was organised by Rebuilding Macroeconomics, a group set up by the UK’s Economic and Social Research Council (ESRC), in 2017. As the group announced at the time, its intention was to create a network of experts from different disciplines including “psychology, anthropology, sociology, neuroscience, economic history, political science, biology and physics”, whose task it would be to “revolutionise” the field of economics.
This sounded like a very good idea, especially since I had called for just such an intervention by a diverse range of non-economists back in 2010, in my book Economyths. However, when I attended the meeting in a small conference room in London, the occasion wasn’t quite as I had pictured it. For one thing, just about everyone else was an economist.
After I gave my brief presentation, which argued for a genuinely new approach to economics – one that extends a school of thought already building momentum in other areas of the social sciences – the first question was something like: “David, are you saying that we need to change everything that we do, from the ground up?” I wasn’t sure how to respond. Had I come to the wrong event?
The second workshop, titled Quantum Theory and the International, aimed to discuss how ideas from quantum physics might be applied in the social sciences – particularly, but not exclusively, the field of international relations. Chaired by leading political scientist Alexander Wendt, author of Quantum Mind and Social Science, the meeting brought together experts from 11 countries and a variety of disciplines including sociology, political science, anthropology, applied mathematics and physics. In other words, all the people who I thought would be at the other workshop.
The event explored the idea that, while the social sciences were based on a classical Newtonian model of human behaviour, the quantum model was much better suited to social reality. For example, researchers in the field of quantum cognition – which treats human decision-making as a quantum process – argue that theirs is the easiest way to model the cognitive effects studied by behavioural economists.
Let’s try again
For my own talk, as a kind of sociological experiment, I decided to give the same one as at the ESRC workshop, with a few extra slides to explain the economics background. The difference was like night and day. The audience seemed engaged. Even sceptics (and there were a couple) listened to my arguments instead of dismissing them.
The topic, of course, was quantum economics. Readers of this column will know that I have been writing about the quantum properties of money for some time. My presentation went further and argued that the money system as a whole can be viewed as a quantum system in its own right, with its own version of the discreteness, duality, indeterminacy and entanglement that is confronted in quantum physics (see my new book Quantum Economics:The New Science of Money).
To start with the obvious, the quantum revolution in physics began with the discovery that energy is transmitted in discrete chunks, which physicists dubbed ‘quanta’. The same is true with money: when you tap your card at the store, the money doesn’t flow out in a continuous stream, but as a single amount.
A particle’s position is indeterminate and only collapses down to a unique value when measured by an observer. That sounds impossibly abstract, until you consider that the price of something like a house is also fundamentally indeterminate, until it ‘collapses’ to a single value when it is sold to a buyer.
Matter is dualistic, in the sense that something like an electron has the properties of a ‘real’ object, which can be detected, and a ‘virtual’ wave, which is described by mathematics. Monetary objects such as coins or bitcoins are similarly dualistic in the sense that they combine the properties of a ‘real’ owned object and a ‘virtual’ numerical value, which is what leads to their confounding effects on the human mind.
Perhaps the most mysterious aspect of quantum physics is the entanglement that can occur between two particles: a measurement on one affects the outcome of a measurement on the other, even if they are located on opposite sides of the universe. But it seems less bizarre when financial contracts such as loans enforce a similar link between creditor and debtor and can be modelled using the same type of mathematics.
When these properties were observed in the behaviour of subatomic particles, they led to the development of quantum mechanics as we now know it – but exactly the same argument can be applied to say that we need a quantum theory of money. The implications go right to the heart of how we model and think about the economy.
The quantum revolution
Now, it isn’t surprising that such a talk would be more warmly received by a group of renegade quantum-thinkers than by people who still have one foot firmly planted in mainstream economics. Anyone who talks about quantum ideas outside of physics or some other ‘safe space’ can expect a good deal of pushback.
However, it did drive home another point, which is that even 10 years after the economic crisis – and despite a number of well-intentioned programmes – economics doesn’t exactly seem to be in the throes of a revolution, or even a real rethink. Instead, the consensus seems to be that economics just needs to tinker some more with its existing models, and the 2008 crisis was just a bad storm that came out of nowhere. As Paul Krugman wrote in 2018, summing up the findings of another Rebuilding Macroeconomic project: “Neither the financial crisis nor the Great Recession that followed required a rethinking of basic ideas.”
To which the only answer is: what would it take, then? Fortunately, physicists didn’t take the same approach to rebuilding physics 100 years ago. Viva la revolución!