Floating exchange rates were dismissed as law-breaking behavior until the 1960s
Evidence
In a similar vein, floating exchange rates were almost universally dismissed and ignored, as summarized by US economist Richard Cooper: “Initially Friedman was nearly alone in his views. Most contemporary economists favored fixed exchange rates and feared the instabilities that flexible exchange rates might bring, or reveal.” Until the 1960s, one historian has argued, “it was widely accepted both by academic and IMF economists that floating exchange rates were a species of law-breaking behavior.” This skeptical view was even more pronounced among politicians and businesspeople than among economists. With the exception of France under de Gaulle in the 1960s, who invoked the gold standard idea, and Canada’s experience with its floating currency during the 1950s, both were entirely ignored. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 427
Categorization
- XREF: Contrasts the later neoclassical consensus on flexible rates with the Bretton Woods-era orthodoxy—useful for mapping the intellectual history against the caricature of a unified neoliberal project. — connects to: Gold-standard advocates lost the internal monetary debate to floating-rate advocates — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 411; A fringe economist’s idea for flexible exchange rates went mainstream within two decades — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 440; Floating exchange rates triumphed despite starting as a minority view even among neoliberals — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 445 (+4 more)
- QUESTION: How did the shift from ‘flexible rates are law-breaking’ to orthodoxy actually happen institutionally—which conversion points (IMF, academics, Treasury) moved first?
Broader Connections
- Fixed and floating exchange rates operate by opposite logics
#qualifies(0.75) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 121 - Floating exchange rates preconditioned the rapid liberalization of global capital
#expands(0.75) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 448 - Neoliberals split into warring factions over fixed versus floating exchange rates
#expands(0.70) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 41