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Recent experience of the great recession of 2008 has renewed

One problem is standing out above all others in social science: how should humanity govern itself? The problem is so important that all wars of humanity in the past, present, and future, are directly related to this problem. Despite the fact that this problem has attracted interests of some greatest thinkers for thousands of years: Confucius, Plato, Aristotle, Machiavelli, Locke, Washington, Jefferson, Madison, Kant, Marx, Einstein, Hayek, and many others, yet the problem remains unsolved. The latest thinking on this humanity governing problem by mainstream social scientists is represented by views of Friedrich Hayek. In his writings, Hayek repeatedly warned that we must shed the illusion that we can deliberately create the future of mankind. This paper disagrees with Hayek and proves for the first time that this problem is solvable scientifically applying recentlycreated physics laws of social science, if the problem is formulated in a correct way: what kind of governing political structure of humanity is most stable? Most-stable structure problems appear routinely in the theoretical and experimental condensed matter physics. We show that the humanity governing problem is equivalent to find an equilibrium political structure of a human society, which is a many-body physics problem 100% solvable using the maximum entropy approach widely-used in the condensed matter physics. This paper establishes the framework and methodology of quantum politics and replaces traditional political philosophy with quantum physics as the solid foundation of political science, and analyzes the equilibrium political structure of a human society. The main results are quite surprising: (1) Quantum physics does provide a firm scientific foundation for social science. For the first time, political science, economics, and other social science become branches of quantum physics just like optics and chemistry. (2) Quantum physics says that we can create free, fair, just, peaceful, and prosperous human societies. We prove that there is certainly no better alternative than the equilibrium political structure, which is defined by a set of 16 democratic principles. (3) The existing democratic governments in the world can be improved in significant ways. For example, there are many fundamental design flaws in the US constitution. American civil wars, slavery, epidemic gun violence, and run away government debts are some direct results of design flaws of the US constitution. (4) Quantum physics clearly says that there is a global political equilibrium state, which corresponds to the permanent world peace. This paper provides a theoretically-sound and practical solution to eliminate the nuclear, biological, chemical, robotic, and other forms of weapons of massive destruction. In the long run, humanity can grow up and will put an end to deaths, miseries, and economic destruction caused by wars, which have been plagued us since the dawn of humanity.

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The poor performance of macroeconomic models during the great recession of 2008 has forced many economists to re-examine macroeconomic theories, and search for creditable alternatives to the popular dynamic stochastic general equilibrium (DSGE) models. This paper derives a new macroeconomic model from recently published Fundamental Equation of Economics (FEOE) and applies the new model to answer a general question what causes economic crises. The macro model known as the indeterministic balance sheet plus (IBS+) model proposed in this paper for the first time turns out to be a special breed of accounting models. Different accounting models are more or less same in the way of handling empirical accounting data and flow of funds, and different in the way of forecasting the future. The IBS+ macroeconomic model takes the indeterministic view of the future balance sheets with the emphasis on probabilistic causalities, tail risks, economic reality described by balance sheet accounting, truthfully capturing the sectorial flow of funds and dynamics of economics, universally applicability, and a rock solid scientific theoretical foundation. The IBS+ model is very different from the popular dynamic stochastic general equilibrium (DSGE) models and agent-based computational economic (ACE) models. Through a side by side comparison, we prove that IBS+ model is superior to DSGE or ACE models in many ways. This paper concludes that DSGE models are probably intellectual dead ends, and economists should stop investing heavily with DSGE models and instead should replace DSGE models with IBS+ models. Economic crises have plagued humanity since the dawn of capitalism. Despite intense studies over last several hundred years, the questions about causes, forecasting, and prevention of economic crises remains unsolved. This paper proposes a classification of causes of economic crises using IBS+ models to analyze balance sheets of key economic sectors. Applying this classification to examine recent economic crises, we conclude that most economic crises are caused by mismanagement of balance sheets by key economic players. This paper suggests that economic crises are largely caused by inevitable misbehavior of humanity and not caused by any fundamental flaw of capitalism. Just like improving the individual health and personal hygiene is the key to prevent epidemic diseases in societies, the key to prevent future economic crises is to promoting financial disciplines and strengthening risk management of key players in economics. Because some economic crises can be caused by natural and man-made factors beyond the scope of economics like earthquakes and wars, the frequency of economic crises can be minimized by proper risk management practices but economic crises can never be completely eliminated. Historically, treating mismanagement of balance sheets as main causes of economic crises is a generalization of Austrian business cycle theory, Fisher's debt deflation theory, and Minsky's financial instability hypothesis.