Although in the Schumpeterian theory of evolution the causal relationship between the innovative entrepreneurial activities and the credit system is not clearly distinguished, when we take the behaviour of the banking system into account, we can suggest a Schumpeterian scheme in terms of some monetary dynamics. Therefore we consider an active and innovative banking system and stress the close relation between real dynamics and the monetary system, the latter being not solely a complement of the industrial development but a necessary condition in a private decentralized economy. first, we remark that there are two markedly different paradigms in economics: the Real paradigm and the Monetary paradigm. The choice between these two alternatives is one of the most methodological (epistemological) and philosophical fundamental problems in economics because it determines the conditions and the
consequences of our analytical thinking. Actually one can show that the Schumpeterian methodology brings to a change of paradigm in economics. It seems to be that the change of paradigm is also a change of issues. The proof of this assertion can be given by the change of analyse which, modifying the conception of the economy, allows us to interpret the behaviour of banks in an innovative-dynamic setting. Then the second idea emphasizes that although the Schumpeterian methodology is usually applied inmonetary economics in a way that the economic growth, i. e., the entrepreneurs’ projects to expand the level of employment call the expansion of bank credit, we can consider this causality in a different way. The innovative behaviour of banks affects the real economy and also, rationing the credit, banks may put some financial quantitative limits to the growth process. Thus improving the particular theoretical choice of Schumpeter we show that in a monetary economy the financial system, especially the banking system, affects the dynamic of the whole economy. Therefore, the main structure of this chapter is based on the fact that the Schumpeterian methodology is an evolutionary one and can permit us to comprehend the economic system in a dynamic monetary fashion. The philosophical and methodological issues raised by the economic science have a great importance for Schumpeter’s analysis. The opposition between Real paradigm and Monetary paradigm as two rival methods of thinking the economic system emphasized by Schumpeter constitutes a good example in this field.
A statement on Schumpeter’s methodology and philosophy
The Schumpeterian methodology comprehends the economic system in a dynamic evolutionary setting. When we are dealing with a dynamic market economy, we are dealing with the monetary economy. The change of methodology does become a change of paradigm and the relevant economic analysis a monetary analysis.
