The definition of a capitalist society, the main subject of the Schumpeterian economic analysis, is linked unambiguously to the definition of a monetary economy. In his Capitalism written for Encyclopaedia Britannica Schumpeter calls a society capitalist “if it entrusts its economic process to the guidance of the private businessman. This may be said to imply, first, private ownership of nonpersonal means of production, such as land, mines, industrial plant and equipment; and, second, production for private account, i. e., production by private initiative for private profit”. Then defining accurately the economic system implies a change of paradigm that we call The Monetary Paradigm. That is what Schumpeter suggests: “But, third, the institution of bank credit is so essential to the functioning of the capitalist system that, though not strictly implied in the definition, it should be added to the other two criteria”. This addition calls a fine analysis of the monetary economy. In order to establish such an analysis Schumpeter makes a clear distinction between two bodies of economic analysisThese are not solely two analytical variants. These are “pure types” which give two alternative paradigms because depending on the type chose, the theory will neither have the same conceptual structure nor the same implications. In the Real paradigm, money enters the picture only in the modest role of a technical device which does not affect the economic process. Money is only a veil, it adds nothing new to the real phenomena, " nothing essential is overlooked in abstracting from it"Therefore, we can define with Schumpeter the Monetary Paradigm as a theory of economic process in terms of expenditure flows
The main features of the Monetary paradigm: the market
