Carlo Tognato Central Bank Independence: Cultural Codes and Symbolic Performance Palgrave Macmillan 2012 £55.00 (hardback) 220 pp.
Article first published online: 19 MAR 2014
© London School of Economics and Political Science 2014
The British Journal of Sociology
Volume 65, Issue 1, pages 197–198, March 2014
How to Cite
Polillo, S. (2014), Carlo Tognato Central Bank Independence: Cultural Codes and Symbolic Performance Palgrave Macmillan 2012 £55.00 (hardback) 220 pp. The British Journal of Sociology, 65: 197–198. doi: 10.1111/1468-4446.12063
- Issue published online: 19 MAR 2014
- Article first published online: 19 MAR 2014
This timely book deals with the emergence and consolidation of what Tognato calls cultures of monetary stability. Specifically, he asks, how do central banks gain independence while maintaining legitimacy and public support? Moving away from tautological or social psychological understandings of why some nations seem to prefer little to no inflation, while others are happy to let the printing press run, Tognato points us to the ways societies understand themselves, the modes in which the monetary sphere relates to these self-understandings, and the dramatic conditions when these connections become explicit as the three main foundations of stability. In other words, stability is not about values or predispositions, but about dramatic enactments and rituals.
Giving a strong sociological foundation to a concept that has a long history but has received little sustained analysis is certainly one of the book's greatest merits. But so its effort at sketching a roadmap to the analysis of stability cultures. When are we most likely to delineate their contours? Tognato suggests that we look for those rare but meaningful moments when monetary affairs are dramatized, when discussions about money leave the sphere of cold, routine commercial exchange and become ‘morality plays’ about collective identity and the foundations of society.
The most illustrative case where such dynamics are clearly at play is post-WWII Germany, a case that Tognato discusses at some length. The D-mark, he argues, became sacralized, in a process that involved the symbolic victory of one collective self-understanding of the German nation over another. The winner, with a strong focus on the economic miracle as a point of national pride, replaced a powerful, but ultimately waning identity, emphasizing reflexivity about the Holocaust as a way of giving the nation a new moral integrity. The sacralization of the D-mark was central to this victory, and so a culture of stability was established, with the Bundesbank in a role of custodian at its very centre.
In order to show how a stability culture lies in dramatized performances rather than values and preferences, Tognato adds a really nice discussion of two cases – a controversy over a revaluation of the gold reserve, which the Bundesbank opposed and defeated, and another over the exchange rate to be used in the monetary unification of East and West Germany, with the Bundesbank's conservative proposal being defeated in the name of exchange parity. In the first case, the Bundesbank had the upper hand: it could connect to the symbolic centre of Germany society more effectively than the Government. In the second case, the roles were reversed.
The other important case discussed by Tognato is the EU's inability to institutionalize a stability culture. Tognato argues that unlike Germany's, the EU's symbolic centre is more fluid and heterogeneous. The recent debt crisis contributed to not only further fragment this centre, but to pollute it – to populate it with unholy metaphors of contagion, disease, and drain. Tognato, like others before, notes the many contradictions of the European project, but given his focus on stability, he is particularly concerned with the tension between Germany's version of a stability culture, and that of other countries.
In a third empirical chapter, Tognato extends the discussion to the US Federal Reserve's response to the 2007–8 financial crisis, arguing that stability cultures can accommodate some monetary laxity, but only under exceptional circumstances, which must be dramatized as such.
The strengths of the book, in short, lie not only in taking culture seriously, but also in delineating the ways in which culture concretely matters during episodes when monetary authority is contested. Yet, the concept of a stability culture remains a bit slippery. Why should central banks be defined as stability-oriented institutions to begin with? The idea that the role of the central bank is to stabilize the money of account is relatively new; historically, central banks tended to originate from (often repeatedly unsuccessful) efforts at providing liquidity to financial systems in crisis (acting as lenders of last resort). Another role that central banks often took was that of financing national governments. Neither role is by definition inconsistent with price stability (though it can be in practice), but narrowing the role of the central bank to that of guarantor of the latter may lead us to emphasize certain national experiences (like Germany's) at the expense of others.
In other words, whether and why stability cultures vary systematically across national contexts, and whether the central bank remains fundamental to all of them, are questions that deserve further analysis. What Tognato firmly establishes is that stability cultures cannot be understood without paying attention to how money is sacralized. Perhaps, then, this book may be read not as a theory of how central banks defend their independence (a concept that has a strong neoliberal baggage), but how they preserve legitimacy in the face of competing claims to monetary authority. It is to Tognato's merit that he makes such questions even possible, rendering his book a really nice addition to the cultural analysis of economic matters.