Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Hayek and Halperin on the international monetary order. Ideas from the 30s and 40s.

Nenovsky Nikolay, Université d'Amiens

In the late 1930s and the first half of the 1940s, there was a theoretical debate about the ways to reconstruct the international monetary order as an important element of the liberal economic system, and to overcome monetary nationalism (exchange controls, barter transactions, bilateral clearing, etc.). The liberals F. Hayek and M. Heilperin, who, despite a number of common approaches characteristic of the Austrian analysis, diverge in their approaches to the achievement and ultimate forms of an international monetary system. In general terms, while Hayek is a proponent of "individualist" international political economy, Heilperin takes into account the role of nation-states and national policies, and this makes him a representative of "realism" in international political economy (there is a discussion between the two on this point). The paper presents Hayek's three monetary systems (homogeneous, heterogeneous, and nationalistic), and the three institutional solutions he proposed over several years, which also boil down to three – (i) an advanced gold standard (100% money) (1937), (ii) monetary federalism (1939, 1944), and (iii) a commodity/resource basket (1943). Heilperin, for his part, believed that to get to an advanced gold standard, one had to go through a system of multilateral clearing, and in this he supported E. Milhaud’ s interesting project (1934). The debate during the period under review has not only theoretical significance for understanding what is going on today, but also important practical implications for the current state of international monetary relations. References Hayek, F. (1937). Monetary Nationalism and International Stability, London, Longmans Green. Hayek, F. (1939). The Economic Conditions of Interstate Federalism , New Commonwealth Quarterly, 5 (2): 131-49 Hayek, F. (1943). A Commodity Reserve Currency, The Economic Journal, 53 (210/211): 176 - 184 Hayek, F. (1944). The Road to Serfdom, Chicago, Chicago University Press Heilperin, M. (1934). A Method of Reconstructing International Economic Relations, Annals of Collective Economy 10 (2): 265-275 Heilperin, M. (1939). International Monetary Economics, Green and Co., London Heilperin, M. (1946). The Trade of Nations, Longman, Green and Co., London Heilperin, M. (1960). Studies in Economic Nationalism. Paris-Genève, Droz and Minard. Heilperin, M. (1968). Aspects of the Pathology of Money. Monetary Essays from Four Decades, Michel Joseph limited for the Graduate Institute of International Studies, Geneva, London Milhaud, E. (1933). Trêve de l'Or et Clearing International. Plan pour le Rétablissement des Échanges Internationaux, Paris, Maison Coopérative du Livre

Area: Eshet Conference

Keywords: international monetary order, monetary nationalism, monetary federation, F. Hayek, M. Heilperin