Schumpeter and the post-Keynesian monetary theory

Abstract

The name of Schumpeter is not among those of the precursors of post-Keynesian monetary theory. This seems understandable when considering Schumpeter's ferocious criticism of The General Theory. However, in recent years various authors have highlighted significant points of contact between Schumpeter's monetary theory and that of Keynes and of post-Keynesians. The objective of this work is not only to indicate the similarities between Schumpeter's monetary theory and that of the post-Keynesians, but rather to show that Schumpeter's approach to money and credit allows making post-Keynesian monetary theory more solid. In particular, we will show that Schumpeter's monetary theory enables to develop an explanation of the principle of effective demand sounder than that based on the simple presence of endogenous money and on the liquidity preference theory.