The Monetarist Era

As the certainties of the Bretton Woods world crumbled away in the early 1970s, intellectual fashions in economics moved decisively away from the Keynesian orthodoxy of the previous quarter of a century. Monetarism became the theoretical and practical discipline to which the vast majority of those involved in economic affairs, in both the academic and policymaking worlds, began to subscribe. It is no coincidence, however, that monetarism’s prevalence has been highly correlated with deteriorating economic performance. Monetarist doctrines are inclined to receive their most sympathetic hearing among political and intellectual leaders who are at the helm of the slowest growing economies. There are interlocking reasons why this is so. It is partly that monetarist prescriptions lead to slow growth and partly that the cultural attitudes which breed a proclivity for them flourish especially strongly in economies with poor growth and employment records.