Joseph A. Schumpeter, Kapital: 6. Nachtrag: Der heutige Stand der Diskussion

Schumpeter’s separately signed encyclopedia-entry supplement surveys the controversy over the concept of capital and argues for renewed attention to money and credit as active elements of capitalist economic life. Originally published in 1923, the work appears here in a republication whose date is undocumented. Its three subsections move from the problem of definition, through competing approaches, to a concept of capital as money or purchasing power available to enterprises. A concluding literature supplement situates the discussion within contemporary research. The central issue is whether “capital” merely names an analytically convenient category or identifies a distinct economic mechanism.

Section (a) begins with the influence of Böhm-Bawerk, the author of the preceding entry. His definition, together with substantially similar variants, has become predominant without securing agreement about usage. Schumpeter’s practical recommendation is to avoid the ambiguous word wherever a more precise designation—consumption fund, produced means of production, or acquisitive wealth—will suffice. Otherwise, an expressly defined term should be introduced. But this terminological remedy cannot settle substantive disagreements. Definitions often seek to identify what characterizes capitalism, where interest originates, or what the factor called capital actually does in economic practice.

In allen diesen Fällen ist der gewonnene Kapitalbegriff nicht Resultat terminologischer Festsetzung, sondern Formulierung sachlicher Ergebnisse.

English translation: In all these cases, the concept of capital arrived at is not the result of a terminological stipulation, but the formulation of substantive findings.

This distinction governs the survey: disputes about capital may encode competing explanations rather than interchangeable vocabularies. Section (b) places Marshall and Fisher near the terminological end of the spectrum. Marshall permits different definitions for different purposes; Fisher distinguishes an existing stock of goods from income as a flow. Such definitions readily include land. Schumpeter nevertheless questions the specifically economic force of the argument that land should count as capital because it has become an object of exchange like other commodities.

He next traces attempts to move beyond concepts restricted to material goods. Fetter and Passow consider productive means in terms of market value; Clark distinguishes particular capital goods from a supposedly enduring “true capital”; Cassel supplements real capital with a monetary sum. These formulations register a difficulty without necessarily resolving it: economic analysis repeatedly needs something other than the concrete objects employed in production. The decisive question becomes whether money merely expresses their value or has functions that cannot be reduced to them.

So gründlich hat die Theorie das, was sie als »täuschenden Geldschleier« erklärte, beiseite geschoben, daß sie über die Vorgänge des Geld-, Kredit- oder Kapitalmarktes nichts aussagen kann.

English translation: Theory has so thoroughly brushed aside what it declared to be a “deceptive monetary veil” that it can say nothing about processes in the money, credit, or capital market.

The polemic targets theories of production and distribution that eliminate monetary relations from their explanatory framework. Money and credit transactions are not simply passive reflections of movements in goods: they materially influence those movements. Schumpeter makes the point through capital’s mobility between industries. Such mobility ordinarily does not mean transferring existing machinery to another use. It means moving invested money, thereby redirecting the employment of the original productive resources—labor and land services. A proposition expressed as the movement of “capital” therefore becomes misleading if capital is understood exclusively as produced physical equipment. From this perspective, older monetary intuitions deserve reconsideration. Schumpeter reassesses McLeod, credits Davenport with clearly identifying the difficulties of goods-only analysis, and mentions Hahn among subsequent attempts at a solution.

Section (c) specifies the emerging alternative. Unlike an abstract value sum or a vaguely conceived fund of productive power, its content is directly observable: money or purchasing power itself. It is neither the monetary valuation of particular goods nor accounting capital understood as net assets or paid-in equity. It encompasses the whole sum working in an enterprise or available to it, making credit-generated purchasing power integral rather than incidental to the definition.

Unter diesen Kapitalsbegriff fällt daher nicht nur effektives Geld in weitester Bedeutung, so weit es nicht dem konsumtiven Güterverkehr dient, sondern auch alle Formen von aus dem Kreditverkehr geborenen Kaufkraftsummen.

English translation: This concept of capital therefore includes not only actual money in the broadest sense, insofar as it does not serve transactions in consumption goods, but also all forms of sums of purchasing power generated by credit transactions.

The exclusion of money serving consumption transactions gives this concept a functional boundary. Capital is not simply everything denominated in money; the relevant purchasing power operates within enterprise activity. The supplement’s significance lies in showing why monetary institutions must enter the explanation of resource allocation, rather than merely supplying a vocabulary for values already determined in the world of goods.

Damit sind die alten Kapitalsbegriffe keineswegs entwertet.

English translation: This by no means invalidates the older concepts of capital.

The closing qualification prevents the monetary turn from becoming an indiscriminate rejection of earlier theory. Older concepts helped combat the beliefs that the interest rate depends on the quantity of money and that increasing money necessarily enriches the economy. Their achievements survive the return toward the everyday monetary meaning of capital. Schumpeter thus advocates a correction of analytical scope: retaining earlier clarifications while recognizing the independent significance of money and credit.