Keynesianism vs. Monetarism in Eighteenth- and Nineteenth-Century France

The clash of Keynesianism and ‘monetarism’ is intense today at the levels of theory and policy. The contention of this article is that it has been so for at least 250 years. ¹ Keynesianism is loosely defined as the economic view that, left to itself, the economy may not fully employ the resources available, and that expansionary governmental action may be required to achieve full employment and growth; monetarists, in contrast, think broadly that the principal economic task of government is to regulate the money supply, and in particular to set limits to it, and that achievement of adequate levels of employment and growth can be left to the market. As always in a period of inflation, the monetarists appear to be winning the intellectual debate today; in periods of recession and unemployment, the tables are normally turned. The debate is broadly the same as that between the Banking School, representing the Keynesian point of view, and the Currency School (monetarism) in the first half of the nineteenth century in Britain, although convergence between the French Keynesians and the Banking School is far from complete. It may be noted that the French Keynesians had their American contemporaries of like persuasion: Benjamin Franklin at the time of John Law, Andrew Jackson in the 1830s of Jacques Laffitte, and, considerably later than the Pereires, the perennial Populist candidate for president, William Jennings Bryan.