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Capital as Will and ImaginationSchumpeter's Guide to the Postwar Japanese Miracle$
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Mark Metzler

Print publication date: 2013

Print ISBN-13: 9780801451799

Published to Cornell Scholarship Online: August 2016

DOI: 10.7591/cornell/9780801451799.001.0001

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The Revolution in Prices

The Revolution in Prices

(p.8) 1 The Revolution in Prices
Capital as Will and Imagination

Mark Metzler

Cornell University Press

This chapter surveys the great wartime inflations of the twentieth century. The twentieth century was the most inflationary century in history, partly due to the financing of great wars as well as the nature of modern capital creation. Regardless of country, major wars are typically funded by major inflations. More precisely, newly created credit supplies the financial capital for war, as it supplies the capital for other forms of enterprise. This was true of Schumpeter's homeland, Austria-Hungary, in World War I, as it was true of imperial Japan in World War II. Japan's postwar reconstruction also proved to be impossible without inflationary finance. Although war inflation differs radically in its results from the capitalist-developmental inflation delineated by Schumpeter, it reveals some of the basic workings of inflation. Reconstruction inflation exemplifies the developmental process at an extreme. Inflationary reconstruction was also the matrix of the Japanese High-Speed Growth system.

Keywords:   inflation, twentieth century, inflationary finance, war financing, Japan, postwar reconstruction, Joseph Schumpeter, capital creation

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