The commodity reserve currency chapter: Friedrich A. Hayek, John Maynard Keynes, and the International Monetary Order

Abstract

The frontal clash in the pages of Economica between Friedrich A. Hayek and John Maynard Keynes in 1931 was unique in scale and influence. Although this event had intense repercussions on the profession as a whole, in 1943 occurred a less discussed episode involving both men. Hayek and Keynes entered into controversy regarding the re-foundations of the international monetary order post-Second World War and the commodity reserve currency proposal. This round was somewhat neglected but is historiographically relevant since it was the only public debate with the active engagement of both sides in a professional journal after 1931. Moreover, it epitomized the personal and intellectual mature relationship of Hayek and Keynes, marked by convergence, dialogue, and friendship. This collaboration was particularly developed when the London School of Economics (LSE) evacuated to Cambridge during the Second World War and Keynes found rooms for Hayek in King’s College, Cambridge.