Non-neutrality of money

This chapter summarises the key ingredients of Schumpeter's monetary theory. While his writing on monetary matters is spread across multiple sources, one may summarise his endeavour in three integrative steps: First, he elaborated the claim theory into a general vision of money as a purely symbolic system of social accounts. Second, he put the quantity theory into a straightjacket of diminished relevance and refocused it in the income-expenditure approach. Finally, he applied further threads from the heterodox literature, most notably the notions of endogenous credit and forced savings, in order to link money with the real economy. Thus, lifting the veil of money and rebutting the postulate of its neutrality, his main assertion was that the endogenous supply of credit renders changes in the price structure an important driver of economic development.