Money, Banking and Dynamics: Two Wicksellian routes from Mises to Hayek and Schumpeter

Reprinted in John Cunningham Wood and Robert D. Wood (eds.) Friedrich A. Hayek: Critical Assessments of Leading Economists (vol. 4), Routledge, 2004, pp. 427-436.International audienceThis paper examines and compares, in both historical and theoretical perspectives, Hayek and Schumpeter's account of the role played by banks and credit in their respective explanations of business cycles. The first section is focused on the common inheritance ofthese two authors, which can be traced back to Wicksell, going from Mises whose Theory of Money and Credit provides, as we shall see, a crucial link in this perspective.The two following sections deal with Hayek and Schumpeter's respective accounts as well ascritical reconstruction of this tradition. A close examination of their respective treatments ofthe banking system and its effects on economic productive structures then allows to see in anew light the theoretical question of the impact of credit on economic dynamics and its related policy proposals in a different light. The last section is dedicated to a comparison between Hayek and Schumpeter's views of the dynamics of monetary economies and their corresponding policy issues