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Money
and Currency
By Joseph A. Schumpeter Volume 58 No. 3 (Fall 1991) Arien Mack, Editor |
Table of Contents Notes on Contributors Ordering information
After Schumpeter's death in 1950, a huge manuscript on the theory of money was found among his belongings.1 It was soon identified by Schumpeter's wife, Elizabeth Boody Schumpeter, as a book originally entitled Geld und Wahrung (Money and Currency) which Schumpeter had been working on in the early 1930s while he was still teaching in Bonn. This issue of Social Research contains the first two chapters of this manuscript, as translated by the late Arthur W. Marget. The main reason for publishing these chapters is that they contain some very interesting ideas about the social nature of money and how economic theory is not sufficient, in and of itself, to account for all the relevant aspects of money.
Schumpeter's main purpose in writing Money and Currency was to develop a new theory of money, as he had created a novel theory of economic change in The Theory of Economic Development (1911). Schumpeter, however, was never able to complete the manuscript to his satisfaction, and he therefore did not want to publish it. In 1970, when a German edition appeared, it passed nearly unnoticed. It was commented upon only by a small number of economists, and in their opinion Schumpeter's monetary theory from the 1930s had little, is anything, to add to the economics literature. Practically no attention was paid to the first two chapters with their argument that money is part of "the total social process"; that money plays an extremely interesting political role in society; and that economic theory always must be complemented by economic sociology, economic history, and statistics. One of the purposes of publishing these two chapters today is to draw attention to exactly these aspects of Schumpeter's thought.2
It is not exactly clear when Schumpeter decided to write a book on the theory of money. In all likelihood he made the decision in the mid-1920s, just after having been appointed professor of public finance at the University of Bonn.3 The book was to be part of a series called Enzklopadie der Rechts- und Staatswissenschaft, which was edited by Schumpeter's friend and colleague in Bonn, Arthur Spiethoff. It is clear that Schumpeter had very high hopes for his book on money, which represented the first major project in economic theory he had undertaken after his unhappy forays into politics and business during 1919-1924. And at the beginning everything went well for him in Bonn: he was enjoying being back in academia and his first chapters of the money book breathe confidence and joy.5 In 1926, however, disaster struck: within a few months, Schumpeter's mother, wife, and newborn son died.6 Schumpeter was devastated, and to temper his sorrow he tried to retreat into work. But this did not work -- the trauma had made him lose the ease with which he used to write and concentrate. For hours Schumpeter would now sit with an empty paper in front of him, unable to write.7 During the next few years Schumpeter's peace of mind was also disturbed by the fact that he had to write and lecture during his years as a businessman. Still, by the end of the 1920s Schumpeter had succeeded in producing a full manuscript on the theory of money. Spiethoff, who got to see the manuscript, was pleased and thought that the book could be published fairly soon.
But all was not as it should be with the book, and Schumpeter was very unhappy about it. In 1929-30 he made an enormous effort to revise the whole manuscript but failed. In September 1929 he wrote to Spiethoff, "I have made a desperate attempt to finish my book on money...but only to fall back into a state of exhaustion."8 And in April 1930: "I work as crazy every day on my money book..."9 In 1930 something also happened that made things even worse: Keynes published his important A Treatise on Money. Various versions exist of Schumpeter's reaction to Keynes's work. According to a student, Schumpeter tore up his manuscript; while according to a colleague, he burned it. Neither is true, since the manuscript from 1930 was later found among Schumpeter's belongings. Still, it is clear that he now felt that he had to recast his own monetary theory in a radical manner. Wolfgang Stolper was later to note, "I recall in discussions with him after Keynes' Treatise on Money came out that Schumpeter complained that the treatise had made his manuscript completely out of date and that he had to rewrite it from scratch."10
And Schumpeter did try to rewrite his manuscript "from scratch" during the next few years. Even after he decided to move to Harvard in 1932, he worked very hard on the money book. But he was not successful, and in March 1933 he wrote to his friend Gottfried Haberler that "the depression exalting from this manuscript has nearly spoiled my first year at Harvard."11 Exactly when Schumpeter made the decision to stop working on the money book and instead concentrate on his next huge work, Business Cycles, we do not know. The last time that Schumpeter sounds affirmative about finishing the whole book is mid-1933.12 As late as 1935, however, the book was still advertised in Germany as "forthcoming."
On and off for the rest of his life Schumpeter contemplated writing a book on money, and he often referred to his soon-to-be-published book on the topic. In 1946 he even signed a contract to produce a book entitled Money (as well as one entitled Banking) for the Harvard Economic Handbooks Series, edited by Seymour Edwin Harris.13 Elizabeth Boody Schumpeter also tells us that during the late 1940s Schumpeter retrieved his 1930 manuscript from "the brown trunk, in which it was kept" in order to work on it.14 And two months before his death, Schumpeter wrote to a friend that "within a year or two I hope to write a book on money..."15
But the money book was never written, and after Schumpeter's death all that could be found was an enormously unwieldy manuscript with masses of appended material, often in Schumpeter's hard-to-decipher shorthand. Schumpeter's wife, who devoted several years to the task of arranging Schumpeter's papers, decided to try to have the money book put in order and translated into English. The person she chose for the task was Arthur W. Marget, a friend and colleague of Schumpeter's who had been at the economics department at Harvard in 1932-37 and who was very interested in Schumpeter's theory of money.16 Some time after Schumpeter's death, Elizabeth wrote to a friend, "I have been very fortunate in solving one of my translations problems. Arthur Marget, who spent two weeks with me recently in Taconic [where the Schumpeters had a house], has taken away the manuscript of the unpublished book on money. He will have it typed and will then translate it...For Marget it will be a labor of love, and I am sure that he will do it with great care."17
The same year Schumpeter died, Marget was appointed to an important position at the Federal Reserve in Washington, and this left him with little time to work on Schumpeter's manuscript. Still, during the nest few years he succeeded in having a typed copy made of the manuscript as well as translating the first three chapters. But this is as far as he got, and by 1954 Marget realized that he would never be able to finish the task. He wrote in the fall of 1954 to one of the trustees of the Schumpeter estate that "I had hoped that I would find the time not only to go through the manuscript carefully, but actually to undertake a translation of it...But, unhappily, it has turned out to be simply impossible for me to go further with it. I did have a German type-script made...and I managed to start the translation. It is clear now, however, that I shall not be able to take it up again."18 The decision was now made by the trustees to entrust Wolfgang Stolper, an economist who had been Schumpeter's student in Bonn as well as at Harvard, with the task of turning the manuscript into a book and having it translated. Stolper, however, never completed the task--he could not penetrate Schumpeter's notes in shorthand and he always felt a certain resistance to the idea of publishing a work that Schumpeter had expressly refused to make public before it had been improved. "Somehow I feel it is not quite fair to publish a manuscript which Schumpeter sis not wish to have published during his lifetime."19 After a few years Stolper gave up and returned the manuscript to the Harvard Archives. An offer in 1958 by Erica Gerschenkron (the wife of Alexander Gerschenkron) to translate the book was turned down by the trustees--rather unwisely, one feels.
At this point it looked as if Schumpeter's manuscript
from 1930 would never be published. In 1970, however, a German edition
suddenly appeared. As it turned out, Marget had given the economist
Fritz Karl Mann a copy of the typed version in the 1950s; and it was this
version that was now published, under the title Das Wesen des Geldes.20
And today, another twenty years down the road, the first two chapters of
Money
and Currency can finally be published--thanks to Marget's having translated
them and to the generous editorial policy of Social Research.
Table of Contents
Notes on Contributors
(at time of publication)
Jean Bethke Elshtain is Centennial Professor of Political Science and professor of philosophy at Vanderbilt University. Her most recent book is Power Trips and Other Journeys: Essays in Feminism as Civic Discourse (1990).
Maud L. Eduards is an associate professor of political science at the University of Stockholm.
Yasmine Ergas is a staff associate with the Social Science Research Council.
Faye D. Ginsburg is associate professor of anthropology at New York University and the author of Contested Lives: The Abortion Debate in an American Community (1989).
Margaret Levi professor of political science at the University of Washington, is the author of Of Rule and Revenue (1988).
Francis Fox Piven is distinguished professor of sociology in the Graduate School and University Center of the City University of New York and coauthor most recently of Why Americans Don't Vote (1988).
Joseph A. Schumpeter (1883-1950) professor of economics at Harvard University 1932-50, wrote Theory of Economic Development (1911), Capitalism, Socialism, and Democracy (1942), and History of Economic Analysis (1954).
Adam B. Seligman is a Fullbright Fellow at Eotvos Lorand University in Budapest. His The Idea of Civil Society will be published in 1992.
Sara Singleton is a doctoral candidate in political science at the University of Washington.
Richard Swedberg associate professor of sociology at the University of Stockholm, wrote Schumpeter: A Biography (1991).
Yael Tamir is a lecturer in the Department of Philosophy at Tel Aviv University.
