ABSTRACT
It is a fairly commonly held view these days that Schumpeter’s work on money and banking is by no means easy to access, making it particularly difficult to arrive at clear conclusions regarding the author’s own point of view. This difficulty is compounded by Schumpeter’s extensive work on the history of thought in this field, encompassing, as it does, thorough investigations of numerous contributions to the debate on money and credit by authors writing in different traditions of economic thought. Among these, the Wicksellian tradition is of particular interest. First, it is from this perspective that Schumpeter’s view of the role of bank credit for dynamic economic processes can be best understood.1
Secondly, provided a fairly broad definition of the Austrian school is acceptable, the discussion can be extended to an assessment of the Wicksellian influence, in the field of monetary and business cycle theory, on the Austrian school in general. Although a generation apart and representing different strands, both Schumpeter and Hayek were part of the Austrian tradition. The strand of Austrianism associated with Mises and Hayek led to the modern Austrian school, whereas Schumpeter developed his own version of Austrian economics which has been considered as unique ever since. However, as we shall develop, these two strands of the Austrian tradition share a common Wicksellian heritage, even though Hayek’s and Schumpeter’s respective accounts of the dynamic interactions between credit and productive activity appear to be rather distinct analytical extensions of the original Wicksellian cumulative process. To be more specific, comparing the two authors’ views on the role played by bank credit through its effects on income distribution – via forced saving – and on inflation during the different phases of cyclical dynamics – impulsion, propagation, reversal – is not only a worthwhile exercise in its own right, but is of particular interest with a view to clarifying Schumpeter’s conception of capitalist dynamics.
