Barry Eichengreen has demonstrated how this monetary system of the gold standard grew increasingly dysfunctional with the rise of democracies, strong trade unions, and the rise to prominence of interventionist and (proto-)Keynesian theories and state practices around the world. Under these new circumstances, governments had a hard time aligning their monetary policies solely to stabilize the necessary amount of gold and defend the currency peg when demands such as full employment and economic growth were gaining in importance. The gold standard broke down during the First World War, and all efforts to reinstall a gold exchange standard during the 1920s—that is, all attempts to contain the political power of trade unions and voting people—failed due to a lack of harmonization between central banks, protectionist capital controls, and a new social balance of power.

Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, loc. 415