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By means of a study of current credit theories and Joseph Schumpeter´s original writings, this essay is inquiring into the roots of pure credit theories in regard to model-theoretical and methodological properties. Three recent methodological approaches are analyzed: firstly, endogenous growth theory concentrates on Schumpeter´s "creative destruction" process by which entrepreneurs introduce innovation into the economy. Secondly, stock-flow consistent modeling ensures that all purchasing power created through credit is rigorously accounted for until its destruction via debt repayment. Thirdly, agent-based modeling provides rigorous micro-foundation and allows for heterogeneity of economic agents. These three approaches together point to the fruitful rediscovery of Schumpeter´s claim that capitalism has to be understood as the specific development process whereby ad-hoc and ex-nihilio created credit facilitates innovation. Once that fact is accepted, quite naturally the focus of growth and monetary economics switches to the analysis of the institution of credit.

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Manuel Fischer graduated as an economist from the University of St. Gallen and works as a consultant. Living in times of global financial crises and the rapid abandonment of conventional economic wisdoms, he started a blog and specializes on the role of money and credit in economic development.

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