Eucken’s theory of money: ideas for critical reflection

Abstract

The article seeks to provoke reflection on Walter Eucken’s monetary theory and on his methodology. The typical Euckenian search for a direction different from classical liberalism did not involve a break with the neoclassical tradition on monetary matters. Eucken shared the critical attitude of neoclassical theory towards Keynes and Schumpeter’s monetary heterodoxy, remaining tied to a vision of the economic system revolving around commodity money. Eucken was critical of Keynes and Schumpeter’s idea that the creation of money by banks was the first step in economic development or the prerequisite for the start of the production process. The fact that he chose the model of an exchange economy rather than a monetary production economy conditioned the interpretative power of Eucken’s monetary theory.