The purpose of this article is to bring to light a central—although neglected—aspect of Joseph Schumpeter's thought, namely, his theory of money. Regarding the important contribution he made to a “monetary analysis” of capitalism, we show how Schumpeter pertains to a long tradition of alternative views of economic theory that were based on the key role of money, banking, and credit. We particularly stress the very consistency of his monetary thought, mostly focusing on the links between money and credit, as Schumpeter claimed the need for a “credit theory of money.” We base our interpretation on a systematic and thorough exploitation of Schumpeter's posthumously published book, recently translated into English under the title A Treatise on Money. This is an essential resource, in which Schumpeter replaced the orthodox view of a “real” economy by the central concept of money as a “social accounting” system. We offer some insights regarding the core ideas of Schumpeter's book and shed light on a quite unknown aspect of his monetary theory: the key role of central banking and monetary policy. We also suggest the original proposition that, in Schumpeter's thought, the hierarchical banking system manages and regulates economic life in the dynamic framework of an evolving capitalism.
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