Hayek's Evolving Views on the Gold Standard

F. A. Hayek’s very first publication, “A Survey of Recent American Writing: Stabilization Problems in Gold Exchange Standard Countries” ([1924] 1999), dealt with proposals to reform the monetary systems of the period. Near the end of his career, in the monographs Choice in Currency (1976) and The Denationalisation of Money (1978), he returned to questions of monetary reform. During the intervening 50-plus years, his view of the gold standard evolved. Between 1925 and 1940, Hayek offered two cheers for the gold standard as a mechanism for maintaining monetary equilibrium. If too slow, it predictably worked in the right direction, unlike the price-level stabilization policies that other economists of the period (Irving Fisher, John Maynard Keynes) proposed to put in its place, and unlike a discretionary monetary policy. But during this period, he modified his views about the theoretical ideal monetary system against which real-world systems should be judged, and accordingly about just where the imperfections of a gold standard lie.