The Monetarist Era

Abstract

As the certainties of the Bretton Woods world crumbled away in the early 1970s, intellectual fashions in economics moved decisively away from the Keynesian orthodoxy of the previous quarter of a century. Monetarism became the theoretical and practical discipline to which the vast majority of those involved in economic affairs, both in the academic and policy making worlds, began to subscribe. It is no coincidence, however, that the prevalence of monetarism has been highly correlated with failure of economic performance. Monetarist doctrines are inclined to receive their most sympathetic hearing among political and intellectual leaders who are at the helm of the slowest growing economies. There are interlocking reasons why this is so. It is partly that monetarist prescriptions lead to slow growth, and partly that the cultural attitudes, which breed a proclivity for them, flourish especially strongly in economies with poor growth and employment records.

‘It would be a great reform in politics if wisdom could be made to spread as easily and as rapidly as folly.’

Winston Churchill