ECPR

Install the app

Install this application on your home screen for quick and easy access when you’re on the go.

Just tap Share then “Add to Home Screen”

ECPR

Install the app

Install this application on your home screen for quick and easy access when you’re on the go.

Just tap Share then “Add to Home Screen”

Political Myth and Central Bank Independence in Europe

Euro
Narratives
Political Ideology
Eurozone
Political theory
Hjalte Lokdam
The London School of Economics & Political Science
Hjalte Lokdam
The London School of Economics & Political Science

Abstract

Building on Blumenberg (1985) and Bottici (2007), this paper analyses the work that political myth performs in grounding central bank independence in Europe. A core concern of much political economic thinking in Europe and the US, central bank independence has emerged as a key institutional feature of contemporary capitalist economies. Focussing on its development in Europe, this paper approaches this political idea by focussing on the political myths on which it is based. More specifically, I focus on the way certain myth complexes have been used by theorists and ‘practical men and women’ in order to imbue central bank independence with a significance beyond its economic rationale. The paper outlines how the first institutionalization of central bank independence in post-war Europe, the German Bundesbank, gained political traction through extensive work – particularly by ordoliberals – on the myth of the German hyperinflation. The paper then discusses how this myth was reworked to fit the interstate context of the European monetary union by adding a dimension relating to the pre-euro monetary anarchy. In discussing these myth complexes, the paper asks: to what extent is the ‘social contract’ of central bank independence sustained by a fear of some kind of (violent) ‘state of nature’? The objective of this is not to challenge the myth or question the theory’s claim to scientific ‘truth’ but rather to highlight the close link between mythical narratives and abstract scientific discourse in ideological constructions. Whether through hope or fear, myths, as Sorel (1908) conceived of them, act as a pouvoir moteur, bringing abstract principles into the realm of political action. Finally, with reference to contemporary attempts, the paper reflects on the relative merits of debunking or developing alternative myths in ideological counter-moves that seek to reopen the political question of the government of money.