Democracy and independent power in central banks and beyond

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The following questions guide my research: What justifies an independent institution's right to reject the demands of a democratically elected government? What gives it the authority to do so? Such questions go to the heart of the idea of central bank independence (CBI) - the insulation of the conduct of monetary policy from elected representatives. In addressing them in my research, I highlight that CBI is fundamentally misunderstood if, as prevalent perspectives do, it is seen merely as an institutional fix to the problem of securing price stability. In contrast to dominant approaches such as those derived from the time-inconsistency theory of Kydland and Prescott (1977), my research demonstrates that CBI cannot be understood on the basis of its economic rationality alone. Rather, it expresses a certain conception of the just society and how it is to be achieved. CBI thereby has important political and constitutional consequences by constraining what governments can do in terms of economic policymaking. The question of whether such constraints are democratically legitimate, then, depends on the source of the central bank's authority. The question of CBI is therefore a question of political and constitutional theory.Approaching CBI as a way of thinking about politics (Freeden 2013), my research employs a unique interdisciplinary approach to trace the historical evolution of the idea in theory and practice from the interwar period to the Eurozone Crisis. I highlight that CBI responds to the problem that the value of money is simultaneously founded on political authority and perpetually threatened by it. In responding to this problem, CBI embodies a theory of the relationship between monetary policy, politics and democratic representation that I reconstruct on the basis of historical and theoretical sources. In short, I highlight that the idea of CBI is premised on the notion that monetary stability is both a precondition for democracy and an expression of democratic will that is more fundamental than that expressed through periodic elections (see also Rosanvallon 2008). However, while this conceptual core is stable, the institutionalisation of CBI differs qualitatively according to the political structure of the community in question. CBI affects how democracies govern themselves, but how it does so varies depending on the foundation of the central bank's authority.It is the independence of the ECB that is the main focus of my PhD thesis. What distinguishes the ECB's independence from that of other major central banks is that it is given a constitutional status. This means that the ECB exercises sovereign powers on behalf of the Eurozone's citizens and states without being politically controlled. The significance of this constitutional arrangement became clear in the emergency politics of the Eurozone Crisis (see, e.g., Streeck 2014; White 2015; Wilkinson 2015) and the ECB played a crucial role in addressing the Crisis (see, e.g., Braun 2017, Verdun 2017, Tortola and Pansardi 2019). Through its actions, the ECB transformed the way in which the Eurozone and its Member States govern themselves (see also Beukers 2013; Ioannidis 2016; Tuori and Tuori 2014). By adopting a political theoretical perspective on these developments, my research demonstrates how they challenge dominant understandings of (state) sovereignty, on the one hand, and how they affect the conditions of democratic self-government in the Eurozone, on the other.During the ESRC PDF I will publish and disseminate the findings of my research to increase its impact in academia and beyond. In addition to this, I will work towards developing a new research agenda that expands upon my existing research in a manner that allows me to address broader questions concerning the historical and theoretical relationship between democracy and the principle of independence in government.