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    The Impossibility of the Gold-Standard – A Thomist Perspective

    Posted by Ivo Cerckel on June 8th, 2017

    A government’s will is not autonomous and must take reality in account.

    The Kantian categorical imperative upon which the gold standard is based does not take reality into account.

    Kant denies that we can acquire knowledge of “objects in general” through the formal concepts and principles of the understanding.


    Currency is a value standard. One of the three functions of currency is indeed to be a value standard (measuring tool). Currency allows one to compare the values of the different goods and services through a common measuring unit. (1)

    That’s why the idea arises of linking currency to something of objective value, say silver or gold. Under the gold standard the currency is linked to gold, the currency is linked to money. Gold becomes the standard by which value can be determined.

    As Ludwig von Mises wrote in 1912 concerning the virtues and alleged shortcomings of the gold standard in the German edition of his “The Theory of Money and Credit”:

    “The excellence of the gold standard is to be seen in the fact that it renders the determination of the monetary unit’s purchasing power independent of the policies of governments and political parties. Furthermore, it prevents rulers from eluding the financial and budgetary prerogatives of the representative assemblies. Parliamentary control of finances works only if the government is not in a position to provide for unauthorized expenditures by increasing the circulating amount of fiat money. Viewed in this light, the gold standard appears as an indispensable implement of the body of constitutional guarantees that make the system of representative government function.” (2)

    The period 1870-1914 is considered the heyday of the international gold standard, a monetary system where a country’s currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price, says Investopedia.com.

    “The gold standard was based on a legal rule, which was the compulsory formal convertibility, which States recognised with respect to currency. This commitment constituted a “categorical imperative” with constitutional value. The value of the commitment was higher than the value of the current objectives of economic policy”,
    said Professor Michel Aglietta at a 7 November 1996 seminar organised for the centennial of the birthday of Jacques Rueff.  (3)

    This year, 2017, marks the bicentennial of the (the first edition of) David Ricardo’s 1817 book, “On the Principles of Political Economy” in which he wrote that:
    “Experience shows that neither a state nor a bank ever has had the unrestricted power of issuing money without abusing that power; in all states, therefore, the issue of paper money ought to be under some check and control; and none seems so proper for that purpose as that of subjecting the issuers of paper money to the obligation of paying their notes either in gold coin or bullion.” (4)

    As Roland Leuschel and Claus Vogt would write in 2006:
    “The old gold-standard could not change human nature which dictates that no ruler can withstand the pressure to print more receipts than he has gold in reserve. The old gold-standard did moreover not provide for the possibility that an increase of the ounces, kilograms, or tonnes of gold held in reserve would lead to an increase in the currency’s value. Its chief weakness was however that it could be repealed by the politicians.” (5)


    I now come to Immanuel Kant (1724- 1804, 1804 is the year Napoleon enacted his Civil Code), the philosopher of the Enlightenment.

    I quoted Professor Aglietta as saying that the commitment of the gold standard by governments constituted a “categorical imperative” with constitutional value.

    The categorical imperative (German: “kategorischer Imperativ”) is the central philosophical concept in the deontological moral philosophy of Kant, introduced in Kant’s 1785 “Groundwork of the Metaphysics of Morals”, says Wikipedia..

    In the said work, Kant defined the categorical imperative as:
    “Act only according to that maxim through which you can at the same time will that it should become a universal law”
    “Handle nur nach derjenigen Maxime, durch die du zugleich wollen kannst, dass sie ein allgemeines Gesetz werde.” (Akad.-Textausgabe 4; 421 / 88)

    After having given this definition, Kant went on to give us a formulation of the categorical imperative that he thinks is easier to use than the one already given. (6)

    “So act as if the maxim of your action were to become through your will a universal law of nature.”
    “Handle so, als ob die Maxime deiner Handlung durch deinen Willen zum allgemeinen Naturgesetze werden sollte. ‘ (Akad.-Textausgabe 4;421 / 89)

    French Thomist (7) philosopher Jacques Maritain (1882 – 1973) writes that in the 18th Century conception of rights of man, Natural Law was to be deduced from the so-called autonomy of the Will (there is a genuine notion of autonomy, that of St Paul- unfortunately the 18th Century had forgotten it). The rights of the human person were to be based on the claim that man is subject to no law other than that of his own will and freedom.

    And Maritain draws attention to the fact that Kant said in his 1797 book “Metaphysics of Morals” that:
    “Man is subject to no law other than that of his own will.  A person, Kant wrote, is subject to no other laws than those which he (either alone or jointly with others) gives to himself.” VI 223

    “dass eine Person keinen anderen Gesetzen als denen die sie (entweder allein, oder wenigstens zugleich mit anderen) sich selbst giebt, unterworfen ist.”

    And Maritain continues :
    “In other words, man must obey only himself, as Jean Jacques Rousseau put it, because every measure or regulation springing from the world of nature (and finally from creative wisdom) would destroy at one and the same time his autonomy and his supreme dignity
    “This philosophy built no solid foundations for the rights of the human person, because nothing can be founded on illusion: it compromised and squandered these rights, because it led men to conceive them as rights in themselves divine, hence infinite, escaping every objective measure, denying every limitation imposed upon the claims of ego and ultimately expressing the absolute independence of the of the human subject.” (8)

    As Father Copleston, S.J., points out:
    “Kant does not intend to imply that concrete rules of conduct can be deduced from the categorical imperative in the sense that concrete rules of conduct can be deduced from the categorical imperative in the sense in which the conclusion of a syllogism can be deduced from the premises. The imperative serves not as a premise for deduction by mere analysis, but as a criterion for judging the morality of concrete principles of conduct.” (9)

    Kant and Rousseau reject any measure or regulation derived from the world of nature because regulations originating from the natural order of things destroy the autonomy and supreme dignity of the human person.

    French Thomist philosopher Etienne Gilson (1884 – 1978) would however write: “Perhaps Kant’s ethics are but a Christian ethic cut loose from the Christian metaphysic that justifies it, the still imposing ruins of a temple with undermined foundations.” (10)

    Metaphysics or ontology is the science of being as being, said Aristotle.

    Karl P. Ameriks is an professor of philosophy at the University of Notre Dame. He starts his “The critique of metaphysics – Kant and traditional ontology” Chapter in the “Cambridge Companion to Kant” (Cambridge UP, 1992) by saying that Kant’s attitude towards metaphysics and ontology is ambiguous in his Critical work. And he concludes that for Kant to accept a wholly non-rationalist metaphysics would  have involved giving up on the ontological implications of transcendental idealism, something he was not ready to do.

    Kant does not accept any metaphysics. He does not accept that reality imposes limits on our thought. He does not accept that truth is conformity of the intellect to the thing, but he decrees that the thing is whatever the intellect decrees so.

    For Kant, the truth is not out there, but in here.

    For Kant, thinking does not have to take reality in account. And all those who think otherwise are anus-philosophers. (11)

    You see, as Father Reginald Garrigou-Lagrange, O.P., explains, in general metaphysics, there are only two positions

    • those who affirm the objectivity of being and of the principle of identity
      (philosophy of being of Aristotle and Thomas Aquinas) and its negative formulation, the Principle of Non-Contradiction (PNC). the principle of universal intelligibility (12)
    • those who deny it (philosophy of becoming (Heraclitus and Hegel) and philosophy of the phenomenon (Kant and also the nominalists).

    If being is not the first principle of our intellect, we will never reach being.

    Our intellect starts from being which it knows by its direct act before knowing itself by reflection, as intelligence is only intelligible in relation to being.

    Kant starts by depriving intelligence of its essential relationship to being. He did not understand that all knowledge is verbalised with the verb “o be””é This verb denotes a real, not logical, identity between subject and predicate. (13)

    And Kant went on to set the PNC aside

    In his preface to Kant’s  “Jaesche Logic”, (in: Immanuel Kant, “Lectures on Logic”, Cambridge University Press, 1992, (2004 paperback ed.), 521, pp. 523- 524) J. Michael Young explains how Kant made this setting aside of the PNC possible:

    “[Kant] restricted the use, the validity, of [the PNC] by banishing it from the sphere of metaphysics where dogmatism (sic) sought to make it valid, and restricting it to the merely logical use of reason, as valid only for this use alone.”

    Of course, if the PNC is no longer a metaphysical principle, then it is no longer the first principle of being.

    No longer one of the primary or fundamental elements in human knowledge which serve as the bases for all other truths.

    No longer the judgement which is naturally first (just as BEING is the first notion of our intelligence, implied in any consequent notion), and which is presupposed by all other judgements.

    Thinking can then also be in contradiction to/with reality.

    And one can even advocate the concept of the gold standard, which as David Ricardo pointed out in 1817 does not take reality into account.

    Two hundred years after 1817, it’s about time Ricardo’s wisdom sinks in.

    Ivo Cerckel


    Alain de Crombrugghe, “Introduction aux principes de l’ économie  – Choix et decisions économiques”, Brussels, De Boeck, 2016, 2nd ed., p. 84

    [Une des trois fonctions de la monnaie est d’être] un “étalon” de valeur (moyen de mesure)
    La monnaie permet de comparer les valeurs des différents biens et services entre eux grâce à une unité de mesure commune.
    [Gold standard in French is “étalon”-or]

    Ludwig von Mises, “Theory of Money and Credit”
    Part Four: “Monetary Reconstruction” Chapter 21. “The Principle of Sound Money” 2. “The Virtues and Alleged Shortcomings of the Gold Standard”


    Commissariat Général du plan, Editeur scientifique, “Jacques Rueff, Leçons pour notre temps : actes du colloque pour la commémoration du centenaire de sa naissance”, Paris, Economica, 1997, p. 48

    Dr Michel Aglietta is Professor of Economics at the University of Paris X: Nanterre, a scientific counsellor at Centre d’Etudes Prospectives et d’Informations Internationales (CEPII), the main French institute for research into international economics, a member of the University Institute of France.

    The first part of the seminar was devoted to “Money and international monetary system – The relevance (“la pertinence”) of the analysis of Jacques Rueff”. In that part, Aglietta was one of the three members of a round-table under the title “The international monetary system and the gold-standard – Confrontation with the monetary facts”. The report of the round-table starts on p 43. On p. 47 starts the report of the intervention of Dr Aglietta.

    On p. 48, Dr Aglietta is quoted as saying:
    “Létalon-or était un ordre fondé sur une règle de droit, qui était la convertibilité formelle, obligatoire, que les Etats reconnaissaient en ce qui concerne la monnaie. Cette obligation constituait un impératif catégorique à  valeur constitutionnelle. Elle était d’une valeur supérieure aux objectifs courants de la politique économique.”

    “The gold standard was based on a legal rule, which was the compulsory formal convertibility, which States recognised with respect to money. This commitment constituted a categorical imperative with constitutional value. The value of the commitment was higher than the current objectives of economic policy.”

    Quoted by
    Henry Hazlitt, “From Bretton Woods to world inflation – A Study of Causes and Consequences”
    Chicago, Regnery Gateway, 1984
    Auburn, Alabama, Ludwig von Mises Institute, 2012
    pp 170 and 177

    See also
    The Works of David Ricardo
    p. 215

    Roland Leuschel and Claus Vogt, “Das Greenspan Dossier, Wie die US-Notenbank das Weltwährungssystem gefährdet. Oder: Inflation um jeden Preis”, http://www.finanzbuchverlag.de, 2006, 3rd ed., pp. 300 and 304

    J.B. Schneewind, “Autonomy, obligation and virtue: An overview of Kant’s moral philosophy”, in: Paul Guyer, (ed.), “The Cambridge Companion to Kant”, Cambridge UP, 1992. 309 p. 320

    Thomism refers to the philosophy of Thomas Aquinas.

    Jacques Maritain, “Man and the State”, University of Chicago Press, 1951, re-edited Washington, D.C., The Catholic University of America Press, 1998 , pp. 83-84

    Jacques Maritain, “Natural Law – Reflections on Theory and Practice”, edited and introduced by William Sweet, South Bend, Indiana, St. Augustine’s Press, 2001, pp 57-58

    Frederick Copleston, S.J., “A History of Philosophy”, Volume VI  “Modern Philosophy -From the French Enlightenment to Kant”, 1960, Section 5 of Chapter XVI “Kant (5)- Morality and religion”

    p. 324 of the Image Books edition.

    Etienne Gilson, “The Spirit of Medieval Philosophy”, trans. by A. H. C. Downes, New York, Scribners, 1940, (London, Sheed and Ward, 1936), University of Notre Dame Press, 1991, still p. 342.

    In his Introduction to his “Jaesche Logic”, Kant writes: “Im 11ten und 12ten Jahrhundert traten die Scholastiker auf; sie erläuterten den Aristoteles und trieben seine Subtilitäten ins Unendliche. Man beschāftigte sich mit nichts als lauter Abstraktionen. Diese scholastische Methode des AFTER=PHILOSOPHIRENS wurde zur Zeit der Reformation verdrängt, und nun gab es Selbstdenker, die sich zu keiner Schule bekannten, sondern die Wahrheit suchten und annahmen, wo sie sie fanden.” (Akad.-Textausgabe, Vol. IX, p. 31
    (Albert Zimmermann, “Thomas Lesen” (legenda 2) Stuttgart-Bad Cannstatt: Frommann-Holzboog, 2000, p. 276)

    “In the 11th and 12th centuries the “scholastics” appeared; they elucidated ARISTOTLE and pursued his subtleties to infinity. They occupied themselves with nothing but abstractions. This scholastic method of ANUS -PHILOSOPHISING was pushed aside at the time of the Reformation, and now there were thinkers who thought for themselves, who acknowledged no school, but who instead sought the truth and accepted it where they found it. “

    As Garrigou-Lagrange explains in the book quoted in note 13:

    The Principle of Identity (PI) says that being is being, every being is itself, every being is something determined. The principle denotes the ultimate truth of the philosophy of being.

    Everybody uses the Principle of Non-Contradiction (PNC) but its abstract formulation needed Aristotle.

    The principle says:

    • from the LOGICAL point of view: it is impossible that the same attribute ASTSR belongs and does not belong to a thing
    • from the METAPHYSICAL point of view: the same being cannot ASTSR be and not be.

    (ASTSR = at the same time and in the same respect)

    The PI and PNC are not pure logical principles, but they govern reality also.

    Réginald Garrigou-Lagrange, O.P., “Le sens commun : la philosophie de l’être et les formules dogmatiques” (“Common sense : the philosophy of being and the dogmatic formulae”) 1922, 3rd. rev. ed.

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