Central bank independence as doctrinal imperative emerged only in the 1980s

Evidence

One should not infer that there was a political option of pure central bank independence anywhere else in the developed world prior to the 1970s; rather, different central banks enjoyed varying degrees of being tethered to their respective governments. Until the 1930s, the belief held sway that the ‘gold standard’ rendered any policy independence unnecessary; yet the Bank of England had managed to carve out a modicum of room for maneuver on the grounds that it maintained a private ownership status. The repeated breakdown of the gold standard up to the Great Depression certainly raised the possibility that central banks might perform some more active management role. In any event, there was almost no theoretical tradition of a ‘public interest’ for such banks to serve; mostly, they regarded themselves as guarantors of the interests of their private domestic banks, not as the protagonists of some sort of abstract ‘macroeconomic policy’ informed by economists. Indeed, the shift to a doctrine of the political imperative of central bank independence only dates from the 1980s. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 461

Categorization

• XREF: Reverses the common assumption that central bank independence is an old, settled institutional norm; connects to the broader literature on neoliberal policy diffusion (e.g. the Volcker shock and 1990s central bank reform wave). — connects to: Reformers demand flexible exchange rates and growth-oriented central bank policy

Broader Connections

• Reformers demand flexible exchange rates and growth-oriented central bank policy #corroborates (0.75)