A bold history of the rise of
central banks, showing how institutions designed to steady the
ship of global finance have instead become as destabilizing as they
are dominant.
While
central banks have gained remarkable influence over the past fifty
years, promising more stability, global finance has gone from crisis
to crisis. How do we explain this development? Drawing on original
sources ignored in previous research, The Rise of Central Banks
offers a groundbreaking account of the origins and consequences of
central banks’ increasing clout over economic policy.
Many
commentators argue that ideas drove change, indicating a shift in the
1970s from Keynesianism to monetarism, concerned with controlling
inflation. Others point to the stagflation crises, which put
capitalists and workers at loggerheads. Capitalists won, the story
goes, then pushed deregulation and disinflation by redistributing
power from elected governments to markets and central banks. Both
approaches are helpful, but they share a weakness. Abstracting from
the evolving practices of central banking, they provide inaccurate
accounts of recent policy changes and fail to explain how we arrived
at the current era of easy money and excessive finance.
By
comparing developments in the United States, the United Kingdom,
Germany, and Switzerland, Leon Wansleben finds that central bankers’
own policy innovations were an important ingredient of change. These
innovations allowed central bankers to use privileged relationships
with expanding financial markets to govern the economy. But by
relying on markets, central banks fostered excessive credit growth
and cultivated an unsustainable version of capitalism. Through
extensive archival work and numerous interviews, Wansleben sheds new
light on the agency of bureaucrats and calls upon society and elected
leaders to direct these actors’ efforts to more progressive goals.