The Disaster of Bretton Woods vs. a Real Gold Standard
The Monetary Conservative: Jacques Rueff and Twentieth-Century Free Market Thought
by Christopher S. Chivvis
Northern Illinois University Press, 2010
xiv 234 pages
The French economist Jacques Rueff was the foremost opponent in the twentieth century of the gold exchange standard, and his defense of the classical gold standard deserves close study. In this outstanding intellectual biography of Rueff, Christopher Chivvis, a political scientist working for the RAND Corporation, shows that belief in monetary stability dominated Rueff’s long and distinguished career.
Rueff’s commitment to the free market stemmed from his days as a student at L’École polytechnique, “a venerable training ground for future servants of the French state” (p. 19). Here he came under the influence of the economist Clément Colson, a strong supporter of the free market, although he was not a strict supporter of laissez-faire in the style of Paul Leroy-Beaulieu, the leader of the “Paris school.” Rueff adopted the position he had learned from Colson and held it throughout his professional life: although the free market was for the most part desirable, there was a role for the state as well. He did not fully share what in an essay in honor of Mises he called the latter’s “intransigence,” though on the deficiencies of the gold exchange standard he equaled or exceeded it.
Rueff’s fundamental argument is this. The greatest danger to the system of market prices is inflation, which impedes, if it does not altogether prevent, market coordination. What leads a government to inflate is deficit spending. If government programs are not paid for through taxes, the market is disoriented. People make investment and consumption decisions that lack a basis in genuine preferences because of the false prices that guide their actions. Inflation was “the work of the devil, because it respects appearances without destroying anything but the realities” (Rueff, qtd. on p. 105).
Rueff argues that inflation leads to totalitarianism.
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