Markets, Productivity, and Happiness in a Historical Perspective

The Significance and Limitations of Schumpeter's Monetary Theory

Seo Takashi, Kanazawa University

In 1970, F.K. Mann published Schumpeter's works, but after J.S. Earley discovered new additional chapters in the Harvard archives, the research and study of Schumpeter's works resumed. After that, J.S. Earley discovered new additional chapters in the Harvard archives, and the research and study of the manuscript resumed, and the three additional newly discovered chapters were published in Italian by L. Berti and M. Messori in 1996. These are the current achievements of manuscript research leading to this study. In this study, I will discuss the possibility of integrating the analysis of the capitalist economic process with the filling of the missing link in Schumpeter's system by conducting a theoretical-historical study of the content of Schumpeter's monetary theory itself, rather than the study of the manuscript itself. Schumpeter's system of economic theory is characterized by its focus on the "process" of the capitalist economy and its attempt to elucidate it from the multiple interdependence of the Walrasian theory of cyclical flows and the Marxian theory of economic development. In doing so, he tends to focus on the process of creative destruction of the circular flow, which is triggered by the practice of new combinations by entrepreneurs. However, Schumpeter's greatest contribution is his coordination of the role of banks in initiating this process, since the implementation of the new combination cannot begin without the provision of new credit by banks. This is why Schumpeter's "credit theory of money" must first be clarified, and why the capitalist economic process must be clarified on this basis. Specifically, I will examine the relevance of the 1917-18 article and the later manuscripts on monetary theory, as well as a detailed examination of the social calculations in the capitalist economic process discussed in Chapters 4 to 8 or 9 of the "Monetary Theory" published by Mann, and the discussion of money markets and the price level in Chapter 11 and later.


Keywords: Schumpeter, credit theory of money, capitalist process, money

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