Central Bank’s Ideational Construction

This study examines the ideational construction of independent central banks, understanding them as ideologically constituted socio-economic variables that are not some form natural progression toward a neoliberal economy. The concept of central bank independence (CBI) receives legitimation through a number of discourses and academic conceptions, combining with particular distributional coalitions and interest groups that form an integrated epistemic community of policy production and governmental regulation. Such an epistemic community does not develop naturally, but is constructed through particular historical understandings of the economy and polity, that promote a general framework favourable for CBI to grow and hegemonically stabilise.

The study is linked here: Central Bank’s Ideational Construction

Here is the abstract:

In this essay I look into the constructed nature of central bank independence (CBI) as a socio-economic concept. CBI is presented as a major element of modern economic orthodoxy, seen as the natural progression of economic history where states become less powerful and the market alongside independent quasi-regulatory institutions become more powerful. However, looking at the developing ideational and political understandings that emplaced this neoliberal framework, we can see a political construction to CBI. CBI is part of a discourse that sees the economy as a rational entity, always moving toward equilibrium with states and the voting public being interfering actors who distort the market, and interprets crises as originating from these interfering actors. Thus we also see changes in the patterns of politics and voting (particularly in the UK and US) which show a move toward a new form of electoral public, represented by the median voter and an individuated consumer of politics rather than a politicised, partisan public. These shared political and ideational understandings form a wider epistemic community which constructs a socio-economic ideology that legitimates neoliberal economic governance and a narrowed dialogic democracy, providing a political basis through which CBI could be developed and legitimated.

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