Managing Modern Money

This chapter addresses how John Maynard Keynes sought to transform the problem of how to govern modern money from an agonizing dilemma into a daring attempt to find a new internationalism that could ensure genuine monetary autonomy. The British suspension of gold convertibility in September of 1931 illustrated the need for domestic policy to break out of the rigid imperatives of an international monetary standard. Instead of merely embracing the unilateral suspension of gold, Keynes sought to develop a new template for international coordination that would—unlike the gold standard—allow for substantial domestic policy autonomy. These ideas eventually culminated in his proposal for an International Clearing Union during the 1940s. The Bretton Woods monetary agreement that shaped the postwar world is sometimes seen as an embodiment of this vision, but Keynes's international proposals were largely rejected at the Bretton Woods conference and they remain unrealized to this day.