Introduction

On the frontispiece of Alfred Marshall’s Principles of Economics is the statement: natura non facit saltum (‘nature does not proceed by sudden leaps’). Yet, in the early 1970s, after a quarter of a century of bureaucratically determined exchange rates, the world appeared to leap into a regime of market-determined exchange rates. In the previous decade, those who administered and policed the Bretton Woods international monetary system considered a variety of reforms but ‘firmly and unanimously discarded at the very outset’ the two reforms that were subsequently implemented: flexible exchange rates and flexible gold prices (Triffin 1968, 105; 1976, 49). The role played by academic economists in this international revolution has usually been relegated to minor proportions or ignored altogether. Yet, what appeared to be a sudden policy leap had been preceded by years of academic campaigning — a campaign that is documented and analysed in this study.