Treatise on Money

by Joseph A. Schumpeter, Fritz Karl Mann (Editor), Ruben Alvarado (Translation)

Together with John Maynard Keynes and Milton Friedman, Joseph Schumpeter is regarded as one of the three greatest economists of the 20th century. And yet, his actual economic writing has remained something of an enigma. Capitalism, Socialism, and Democracy, his best-known work, was also an unscientific throw-off in his view. His major economic works - The Theory of Economic Development and Business Cycles - have been misunderstood and underappreciated. What has not been realized is that key elements of the Schumpeterian system have hitherto gone missing. Clues to that system were contained in his magisterial History of Economic Analysis, but the full-orbed outworking was contained in his unpublished German manuscript on money and banking. Now published in English translation, the Treatise on Money provides the key to understanding Schumpeter's system. It shows that Schumpeter's famous emphasis on 'creative destruction' is a more complex phenomenon than is popularly understood: for the monetary component, neglected as a matter of course, actually plays a crucial role in the process. Furthermore, the Treatise provides an understanding of the workings of money, banking, and money and capital markets, that are supremely relevant in the light of current monetary and fiscal policy crises. This present volume is therefore an indispensable contribution to revealing the true Schumpeter to the English-speaking world.

Genres: Economics, Nonfiction, Philosophy

377 pages, Paperback

First published May 22, 2014

About the author

People know Moravian-born Joseph Alois Schumpeter, an American, for his theories of socioeconomic evolution and the development of capitalism.

This political scientist briefly served as finance minister of Austria in 1919. Of the 20th century, the most influential Schumpeter popularized the term "creative destruction."

https://en.wikipedia.org/wiki/Joseph_...

Reviews

[Jooseppi Räikkönen · Rating 4 out of 5]

I have heard the Schumpeter hype before, especially from leftists, but now I really get why people go on about him. I'd say he's now my favourite "enemy" to read if this book didn't also just seem to be... correct?

It's also amazing how much a classical German education shines through, in addition to erudition in all modern social sciences and their methods. Sooooooo good.

[Richard Marney · Rating 4 out of 5]

This is a lesser well-known work of Professor Schumpeter, published posthumously. It anticipated and complemented Keynes, but with an original approach and outcome.

A fundamental tenet of Keynesian economics is the rejection of the classical theory tenets of the neutrality of money and the dichotomy of the real and the monetary sectors. In their place, the Keynes allows for a central role of monetary and financial variables to explain economic cycles. Schumpeter supports this view, but with important differences. Both argue for more complex concepts of money. In Keynes’ analysis, money has multiple roles, most notably as a store of value linked to the liquidity preference. For Schumpeter, money takes the form of credit. With this change in the nature of money, the economy becomes dynamic. The dynamic aspects of economic activity, such as innovation and development, are closely linked to the creation of money in the form of credit. Schumpeter regards credit creation by banks as the main source of finance, once the stationary economy of the circular flow is left behind and the analysis focuses on the process of economic development. Finance fuels the investment at the base of economic activity, and hence innovation and creative destruction. The financial resources (i.e., means of payment) required by entrepreneurs is not money per se, but rather monetary assets in the form of credit.

The book is a worthwhile read for students of economic history and the development of monetary economics.