The political economy of monetary reform

Abstract

Proposals to reform money and banking in the wake of the recent crisis appeal to populist politics on the left and the right: if banks caused the crisis, then their power must be curtailed to prevent a recurrence. Many of these proposals echo ideas which gained attention in the wake of the Great Depression. The purpose of this paper is to consider proposals for reform of money and banking current in Canada in the 1930s, in particular plans for social credit and for social reconstruction, some of which were translated into policy. While both sets of ideas involved a markedly increased role for the state in money and banking, the underlying ontology, political philosophy and theoretical rationale were rather different. The result was different views as to the nature of the problem and the feasibility of different policy solutions.