Chapter 8: Gold: An International Monetary System in the Service of Humanity
In truth, the gold standard is already a barbarous relic. A Tract on Monetary Reform (1923-1, p. 138) Dr Freud relates that there are peculiar reasons deep in our subconsciousness why gold in particular should satisfy strong instincts and serve as a symbol. A Treatise on Money (1930-1, vol. 2, p. 258) It is often said that Keynes only became interested in international economics later in life, owing to his role during the Second World War. Attention is drawn to the fact that his magnum opus, The General Theory of Employment, Interest and Money, deals mainly with a closed economy. This would explain some of Keynesianism’s limitations, increasing economic globalization being seen as one of the main sources of failure of Keynesian policies. This vision is misguided. Throughout his life, Keynes was passionate about international economic questions, especially those of a monetary and financial nature, as theoretician but also as civil servant, negotiator and speculator. During his time at the India Office between October 1906 and July 1908 he studied both India’s monetary problems and the functioning of the international monetary system. His first book, Indian Currency and Finance, was nourished by this concrete experience, as were all his writings, even the most abstract. Published in 1913, it contains an early formulation of his positions on international monetary system reform, which he developed fully in the 1940s. The idea, so fundamental to the Keynesian vision, of rational management of money and the economy is already present in this early work.1...
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