ABSTRACT
Both Keynes and White saw their designs as foundations for achieving social democratic ideals, enabling national governments to pursue full employment objectives through fiscal and monetary policy. If, as they believed, the disasters of pre-war policy-mass unemployment-were due, in many countries, to balance of payments constraints that led governments into beggar-my-neighbour devaluations and deflationary policies, how could that threat from a ‘faulty’ system of international finance be overcome? The trick was to create a system of rules for national management of currencies-fixed, but adjustable, par values with the US dollar, which itself had a commodity anchor in the form of a guarantee of the dollar’s value in terms of gold-and an international institution, the IMF, that would have two tasks: it would enforce the rules and it would provide the short-term finance to assist governments in dealing with the problems that would arise from temporary shocks. It was an ingenious design that brought order to international finance, in chaos since the collapse of the gold standard and the end of the dominance of sterling.
