Shocking Intellectual Austerity: The Role of Ideas in the Demise of the Gold Standard in Britain

Abstract

Britain's 1931 suspension of the gold standard remains one of the most shocking policy shifts of the past century. Conventional explanations focus on changing international conditions alongside the rise of social democracy: when Britons refused to shoulder the increasing costs of defending the exchange rate, the Bank of England was "forced" to abandon the gold standard. This article refocuses attention on policymakers' causal ideas at critical moments. Drawing on numerous primary sources held in several archives, it reveals a cleavage within the Bank over the appropriate response to the flight from sterling. Following the nervous collapse of the Bank's governor, the deputy governor shifted the Bank's strategy from making defensive rate hikes to pursuing fiscal austerity. He then "temporarily" suspended gold convertibility in a gambit to forestall the election he (incorrectly) assumed would unseat the gold standard's supporters in Parliament. When the unintended experiment with a managed float proved successful, Keynes was able to persuade policy-makers to embrace the new exchange rate regime.Reducing the standard of living of the workmen by 50 percent … would be the effect of departing from the gold standard.

Why do states in conflict with each other also sustain resilient cooperation in international regulation? Britain and telegraphy, 1860s–1914

“…Rather than pursuing interests or objective payoffs, ideational theories argue that states' willingness to cooperate in global bodies is driven by prevailing beliefs, norms or ideas, either about their own or other states' or existing international bodies' problems, interests or capabilities. There are many ideational theories; here we focus on those which accept a causal role for these beliefs (Blyth, 2002;Morrison, 2015; even despite his rhetoric, Wendt, 1999) rather than strongly interpretivist accounts which reject causal explanation entirely. Because ideas conflict, states would not be expected to be unitary in beliefs, except where persuasion by ideas is complete.…”

How ideas matter in public policy: a review of concepts, mechanisms, and methods

“…Actors engage with ideas, adjust them, and challenge existing ideas through the use of political discourse. Through discursive practice, actors can build coalitions, shape political agendas, navigate the political arena (Morrison, 2016), and effectively induce policy change. This approach is used in different theories of the policy process, for example in the Narrative Policy Framework and the Social Construction Framework (Sabatier & Weible, 2014).…”

“…Ideological difference of left-wing governments and IMF staff results in fewer waivers (Nelson, 2014 (Nelson, 2014). Suspension of alternative ideas until after elections (Morrison, 2016). Béland and Waddan (2015): few possibilities for challenging existing ideas during elections in UK political institutions.…”

Identidade, ideias e normas na construção dos interesses em política externa: o caso português

“…As decisões não podem ser explicadas apenas com base na lógica de ação tradicional, racional-consequencialista, pois existem diferentes e variadas nos processos adaptativos e de mudança institucional (Parsons, 2002;Hay, 2011;Schmidt, 2008;Morrison, 2016). Como aqui demonstramos, as ideias são decisivas quer na justificação do status quo (regime autoritário), quer em situações de mudança política (transição democrática).…”