Joseph Alois Schumpeter · 1919
This short newspaper interview and policy statement, published in Vienna in March 1919, presents Josef Schumpeter’s program as Austria’s new State Secretary of Finance. Its scope is immediate and practical: the fiscal stabilization of a postwar state whose borders, currency, debt, and international credit position remained unsettled. Schumpeter’s central thesis is that finance must become an instrument of economic reconstruction, not a battlefield for short-term politics.
Das Leitmotiv der Finanzpolitik kann nur sein, sie in den Dienst des wirtschaftlichen Wiederaufbaues zu stellen und die fortwährenden Beunruhigungen des Wirtschaftslebens, die jeden bedrohen und bedrücken, zum Aufhören zu bringen.
English translation: The leitmotif of financial policy can only be to place it in the service of economic reconstruction and to bring to an end the continuous disturbances of economic life which threaten and oppress everyone.
The statement first links public finance to larger political projects. Anschluss with Germany and the socialization of parts of the economy are not treated as alternatives to fiscal order but as dependent on it. For Schumpeter, “ordered finances” are the precondition for sovereignty, reform, and creditworthiness.
Die Vorbereitung des Anschlusses an Deutschland und eine Aktion zur Sozialisierung der Wirtschaft setzen geordnete Finanzen voraus.
English translation: The preparation of union with Germany and an initiative for the socialization of the economy presuppose orderly finances.
He identifies two immediate obstacles: the burden of the war loan and the depreciation of money. The image is deliberately physical and dramatic; reconstruction requires not administrative tinkering but a forceful clearing of obstructions.
Die beiden großen Felsblöcke, die überstiegen werden müssen, sind die Kriegsanleihe und die Geldentwertung.
English translation: The two great boulders which must be surmounted are the war loan and the depreciation of the currency.
The core proposal is a one-time large capital levy. Schumpeter frames it not as punitive redistribution but as an emergency instrument for stabilizing money, beginning price reduction, and restoring confidence. Its legitimacy rests on being radical in scale but careful in execution.
Die nächste Aufgabe muß die Besteuerung des Vermögens sein, welche nach meiner Meinung als einmalige große Vermögensabgabe zu denken ist.
English translation: The next task must be the taxation of wealth, which in my opinion is to be conceived as a one-time large capital levy.
His most characteristic conceptual move is to redefine sacrifice through macroeconomic consequence: if the levy helps restore currency value, the real burden of the tax may be smaller than its nominal severity suggests. The measure is imagined as therapeutic, almost anti-confiscatory, provided it is administered “with a light hand.”
Wenn auf diese Art der Geldwert und die Valuta einigermaßen hergestellt, der Abbau der Preise angebahnt wird, so würde die Vermögensabgabe kein so großes reales Opfer bedeuten, und wenn sie mit leichter Hand halbwegs geschickt gemacht wird, so wird man sie wegen ihrer Folgewirkungen auf die gesamte Wirtschaft eher wie eine Wohltat als wie eine Amputation empfinden.
English translation: If in this way the value of money and the currency are to some extent restored and the reduction of prices is set in motion, then the capital levy will not represent so great a real sacrifice, and if it is carried out with a light hand and reasonable skill, it will—because of its consequential effects on the entire economy—be felt rather as a benefaction than as an amputation.
The program also allows for monopolies in the course of socialization, intended to direct surplus from certain enterprises toward the community and expand collective economic influence. Yet the deepest priority remains monetary stabilization. Schumpeter explicitly rejects an immediate return to the old parity, because such deflationary restoration could injure production; what matters is a dependable value of money protected from violent fluctuation.
Die Hauptsache bleibt nach meiner Meinung die Stabilisierung des Geldwertes; ihr Ziel sehe ich nicht in der sofortigen Herstellung der alten Parität, was ich im Interesse einer ruhigen Entwicklung der Produktion gar nicht als einen Vorteil empfinden würde, sondern in der Herstellung eines gesicherten, den Schwankungen so viel als möglich entrückten Geldwertes.
English translation: The main thing, in my opinion, remains the stabilization of the value of money; its goal I see not in the immediate restoration of the old parity—which, in the interest of a calm development of production, I would not at all regard as an advantage—but in the establishment of a secure value of money, removed as far as possible from fluctuations.
The final section broadens the argument into a political ethic of finance. Invoking Böhm-Bawerk, Schumpeter presents Austrian fiscal history as one in which finance had been subordinated to political expediency.
Böhm-Bawerk hat einmal gesagt, in Oesterreich sind die Finanzen immer Prügelknaben der Politik gewesen.
English translation: Böhm-Bawerk once said that in Austria the finances have always been the whipping boy of politics.
Against that tradition, he insists that the postwar state must stop using finance for political bargains and instead make civic life bearable within its reduced “small house.” Administrative thrift is necessary, but he warns against expecting too much from it or imposing hardship on those already distressed. The relevance of the piece lies in this compressed synthesis: capital levy, currency stabilization, public credit, socialization, foreign financial relations, and administrative reform are all subordinated to the recovery of economic life.
Die alte Erfahrung, daß sich das Wirtschaftsleben auch von schweren Katastrophen schnell erholt, wird sich auch an uns bewähren, wenn wir nicht selbst die Gesundung verhindern.
English translation: The old experience that economic life recovers quickly even from severe catastrophes will prove itself in our case too, provided we do not ourselves prevent recovery.
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