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

This paper examines and compares, in both historical and theoretical perspectives, Hayek's and Schumpeter's accounts of the role played by banks and credit in their respective explanations of business cycles. The first section is focused on the common inheritance of these 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 following two sections deal with Hayek's and Schumpeter's respective accounts as well as critical reconstruction of this tradition. A close examination of their respective treatments of the banking system and its effects on economic productive structures then allows us to see in a new light the theoretical question of the impact of credit on economic dynamics and its related policy proposals. The last section is dedicated to a comparison between Hayek's and Schumpeter's views of the dynamics of monetary economies and their corresponding policy issues.