The Monetary Conservative: Jacques Rueff and Twentieth-century Free Market Thought.

Published by EH.NET (November 2010)

Christopher S. Chivvis, The Monetary Conservative: Jacques Rueff and Twentieth-century Free Market Thought. DeKalb, IL: Northern Illinois University Press, 2010. xiv + 234 pp. $27 (paperback), ISBN: 978-0-87580-417-0.

Reviewed for EH.Net by Brian Domitrovic, Department of History, Sam Houston State University.

A Civilized Relic

Jacques Rueff (1896-1978) is generally known among historians of economics and economic policy as the principal advocate of the gold standard from within the halls of power during the years of the Keynesian hegemony — the middle decades of the twentieth century. He is justly famous for being the eminence grise behind de Gaulle?s move to press the U.S. for gold redemptions in 1965, the effective result of which was the rapid and disorderly end of Bretton Woods. Christopher Chivvis?s Monetary Conservative reveals that we should know Rueff for more than this notable episode from his latter career — for Rueff was one of the more profound intellectuals that the profession of economics has lately produced.

Rueff was among the first students to enroll in the Ecole Polytechnique in the wake of the Great War. He was not inclined to see the war in which he had served as reason to repudiate the development of European civilization to date. Rather, as his studies progressed, Rueff came to hold that the great intellectual traditions of the nineteenth century — especially positivism — had only to be subject to further refinement and humanization for that very civilization to be fitted with sound and enlightened leadership.

It was an article of faith of the neo-Kantianism of the fin-de-si?cle that science should proceed in a ?value-free? manner: conclusions scientifically arrived at are valid, no matter their ethical implications. Often, the impression hung around neo-Kantian science (and not necessarily for objective reasons) that its conclusions were ethically troubling, as opposed to comforting. Rueff came from the opposite perspective. He believed that there is in general a scientifically unknowable life-force that, given the structure of civilization, conduces to the good. It was important for Rueff that policy officials schooled in science and the practical disciplines — statistics, engineering, economics — pursue their work assiduously in a value-free manner, precisely because the likelihood is high that the life-force operating within a well-put-together civilization is benign.

Rueff?s ideas — as they developed in extended publications from the 1920s on — unmistakably bear the mark of Henri Bergson, the preeminent French philosopher of the latter years of the Belle ?poque. As Chivvis?s book makes plain, Bergsonism was the milieu that gave us Jacques Reuff; indeed, the young Rueff once showed up at the old philosopher?s door for advice.

What does this have to do with the history of economics and policy? Let it be clear that The Monetary Conservative is primarily a work in intellectual biography. By no means does it prescind from discussions of economics and monetary systems; these are frequent and apposite. But the great part of the book takes up the question of the larger world-view that informed Rueff?s economics.
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In 1923, Keynes called the gold standard a ?barbarous relic.? It is worth realizing that the great gold advocate Rueff was himself quite the antithesis of the barbarian. In his intellectual project, Rueff dedicated himself to the great philosophical-cum-practical endeavor of his day, namely to leverage the ever-growing capacities of the scientific disciplines with the potencies of natural law. The ?lan vital at the core of Bergson?s philosophy was an ingenious translation of Greco-Christian ideas about telos and natural law into modern idiom. Bergson was thus the most distinguished secular practitioner in the neo-scholastic movement that had arisen in the face of neo-Kantianism. By extension, Rueff must now be seen as the outstanding representative of the neo-scholastic impulse among intellectually informed policy makers.

As for his economics, it is well-known that Rueff was anti-Keynesian. Chivvis reminds us of the salience of Rueff?s positions in this regard. No, said Rueff, there was not a real liquidity preference problem, necessitating government stimulus. Rather, when currency issuers overprint without raising the official price of gold, it is only natural for people to cash in for gold in expectation of a price spike. Raise the price of gold, and the liquidity preference, along with a good part of the Keynesian edifice, will vanish in an instant.

The comedy of the 1960s is here too, including a reminder that one of the reasons the powers-that-be were scared to take Rueff?s advice to triple the U.S. price of gold was that that development might aggrandize the gold producers of the Soviet Union and South Africa. Rueff was overruled in favor of fiat money, and instead of tripling, the dollar price of gold went up twenty-three times in the 1970s.

The Monetary Conservative is perhaps too polite to ask the question that otherwise leaps off its pages. To wit: what is the anthropology of Keynesian economics? Some sort of Freudianism, presumably. An economy left to its own devices yields conditions which at their best are a preamble to insurrectionism; with therapy, this tenuousness can be kept within bounds. Chivvis?s book goes a long way toward suggesting that we paid a large price for the deification of Keynesian economics, and part of that price was philosophical complacency in the face of superior alternatives.

Brian Domitrovic is author of Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity (2009) and is assistant professor of history at Sam Houston State University.

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