Central bank independence: A social economic and democratic critique

Research output: Contribution to journalArticleResearchpeer-review

Abstract

The advent of quantitative easing by the world's major central banks invites renewed questions about the meaning and role of central bank independence in an age of economic crisis. This article draws together insights from economic sociology, history and democratic theory to engage in further discussion about the proper role of central banks in democratic society. We stress some related themes. Our brief history of central banks aims to show how these banks have always been embedded in economic and political coalitions and conflicts, therefore qualifying the term independence; our study also aims to show that in satisficing between conflicting tasks, central banks need to maintain a balance between cognitive competences and normative expectations. Independence is better understood as a form of dependence on the coalition of interests that supported the financial climate prevailing before the global crisis of 2008, one of low wage-price inflation, high borrowing and debt, and loss of prudential control. We argue that independence amounts to a form of re-privatisation of central banks, and that they are increasingly suborned to the pressures of financial markets. At the same time, asset price inflation has sacrificed growth and employment and therefore prolongs the crisis. The economic measures now demanded by the financial crisis prompt new doubts about the independent central bank experiment, potentially in favour of the ex ante model of governmental oversight of central banks.

LanguageEnglish
Pages32-50
Number of pages19
JournalEconomic and Labour Relations Review
Volume24
Issue number1
DOIs
Publication statusPublished - Mar 2013
Externally publishedYes

Fingerprint

Central bank independence
Central bank
Economics
Quantitative easing
Economic sociology
Satisficing
Financial markets
Economic crisis
Privatization
Debt
Experiment
Oversight
Climate
Wages
Asset prices
High inflation
Global crisis
Inflation
Financial crisis
Borrowing

Cite this

@article{bec96480797847e9ba48c5a1d6e21e09,
title = "Central bank independence: A social economic and democratic critique",
abstract = "The advent of quantitative easing by the world's major central banks invites renewed questions about the meaning and role of central bank independence in an age of economic crisis. This article draws together insights from economic sociology, history and democratic theory to engage in further discussion about the proper role of central banks in democratic society. We stress some related themes. Our brief history of central banks aims to show how these banks have always been embedded in economic and political coalitions and conflicts, therefore qualifying the term independence; our study also aims to show that in satisficing between conflicting tasks, central banks need to maintain a balance between cognitive competences and normative expectations. Independence is better understood as a form of dependence on the coalition of interests that supported the financial climate prevailing before the global crisis of 2008, one of low wage-price inflation, high borrowing and debt, and loss of prudential control. We argue that independence amounts to a form of re-privatisation of central banks, and that they are increasingly suborned to the pressures of financial markets. At the same time, asset price inflation has sacrificed growth and employment and therefore prolongs the crisis. The economic measures now demanded by the financial crisis prompt new doubts about the independent central bank experiment, potentially in favour of the ex ante model of governmental oversight of central banks.",
author = "Jocelyn Pixley and Sam Whimster and Shaun Wilson",
year = "2013",
month = "3",
doi = "10.1177/1035304612474217",
language = "English",
volume = "24",
pages = "32--50",
journal = "Economic and Labour Relations Review",
issn = "1035-3046",
publisher = "SAGE Publications",
number = "1",

}

Central bank independence : A social economic and democratic critique. / Pixley, Jocelyn; Whimster, Sam; Wilson, Shaun.

In: Economic and Labour Relations Review, Vol. 24, No. 1, 03.2013, p. 32-50.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - Central bank independence

T2 - Economic and Labour Relations Review

AU - Pixley, Jocelyn

AU - Whimster, Sam

AU - Wilson, Shaun

PY - 2013/3

Y1 - 2013/3

N2 - The advent of quantitative easing by the world's major central banks invites renewed questions about the meaning and role of central bank independence in an age of economic crisis. This article draws together insights from economic sociology, history and democratic theory to engage in further discussion about the proper role of central banks in democratic society. We stress some related themes. Our brief history of central banks aims to show how these banks have always been embedded in economic and political coalitions and conflicts, therefore qualifying the term independence; our study also aims to show that in satisficing between conflicting tasks, central banks need to maintain a balance between cognitive competences and normative expectations. Independence is better understood as a form of dependence on the coalition of interests that supported the financial climate prevailing before the global crisis of 2008, one of low wage-price inflation, high borrowing and debt, and loss of prudential control. We argue that independence amounts to a form of re-privatisation of central banks, and that they are increasingly suborned to the pressures of financial markets. At the same time, asset price inflation has sacrificed growth and employment and therefore prolongs the crisis. The economic measures now demanded by the financial crisis prompt new doubts about the independent central bank experiment, potentially in favour of the ex ante model of governmental oversight of central banks.

AB - The advent of quantitative easing by the world's major central banks invites renewed questions about the meaning and role of central bank independence in an age of economic crisis. This article draws together insights from economic sociology, history and democratic theory to engage in further discussion about the proper role of central banks in democratic society. We stress some related themes. Our brief history of central banks aims to show how these banks have always been embedded in economic and political coalitions and conflicts, therefore qualifying the term independence; our study also aims to show that in satisficing between conflicting tasks, central banks need to maintain a balance between cognitive competences and normative expectations. Independence is better understood as a form of dependence on the coalition of interests that supported the financial climate prevailing before the global crisis of 2008, one of low wage-price inflation, high borrowing and debt, and loss of prudential control. We argue that independence amounts to a form of re-privatisation of central banks, and that they are increasingly suborned to the pressures of financial markets. At the same time, asset price inflation has sacrificed growth and employment and therefore prolongs the crisis. The economic measures now demanded by the financial crisis prompt new doubts about the independent central bank experiment, potentially in favour of the ex ante model of governmental oversight of central banks.

UR - http://www.scopus.com/inward/record.url?scp=84874832623&partnerID=8YFLogxK

U2 - 10.1177/1035304612474217

DO - 10.1177/1035304612474217

M3 - Article

VL - 24

SP - 32

EP - 50

JO - Economic and Labour Relations Review

JF - Economic and Labour Relations Review

SN - 1035-3046

IS - 1

ER -