1. The Legitimacy of Central Banking
1. Riles, Collateral Knowledge, 11–14. See also Riles, “Introduction: In Response”; and the section “A Definition of Culture” in chapter 3 of this volume.
2. Geertz, The Interpretation of Cultures, 3–10.
2. The Challenge to the Technocracy
1. Bank of Japan Act.
2. Goodhart, “The Evolution of Central Banks.”
3. Jasanoff, “Citizens at Risk.”
4. Blinder, “The Evolving Political Economy of Central Banking.”
5. Posen, “Central Bank Independence after the Inflation Is Gone.”
6. Alesina and Summers, “Central Bank Independence and Macroeconomic Performance.”
7. Lockwood, “The Global Politics of Central Banking.”
8. Posen, “Why Central Bank Independence Does Not Cause Low Inflation”; Haan and van ’T Hag, “Variation in Central Bank Independence across Countries.”
9. Posen, “Central Bank Independence after the Inflation Is Gone.”
10. Subbarao, Who Moved My Interest Rate?
11. Carvalho, “The Independence of Central Banks”; Levy, “Does an Independent Central Bank Violate Democracy?”
12. Blinder, “The Evolving Political Economy of Central Banking.”
13. Posen, “Central Bank Independence after the Inflation Is Gone,” 11.
14. Blinder et al., “How Do Central Banks Talk?”
15. Tucker, “The Credit Crisis.”
16. Prates, “The Changing Politics of Central Banking.”
17. The bill failed in the Senate by 9 votes, 53–44, on January 12, 2016.
18. Bernanke, “ ‘Audit the Fed’ Is Not about Auditing the Fed.”
19. They incorrectly claim support for their position from Thomas Jefferson, who was actually making the case for an issuing bank controlled by the people as an alternative to delegating issuing power to private banking institutions.
20. Paul and Spitznagel, “The Fed Is Crippling America.”
21. Paul, “Audit the Fed.”
22. Sanders, “To Rein In Wall Street, Fix the Fed.”
25. Quoted in Fields, “Sen. Cruz Cosponsors Rand Paul’s ‘Audit the Fed’ Bill.”
26. Bernanke, “ ‘Audit the Fed’ Is Not about Auditing the Fed.”
27. Summers, “Here’s What Bernie Sanders Gets Wrong—and Right—about the Fed.”
29. Jopson and Fleming, “Fed Challenged over Governor’s Clinton Ties.”
30. Quoted in Gajanan, “Federal Reserve Chair Janet Yellen Fires Back at Donald Trump over Interest Rate.”
31. Reuters and Fortune Editors, “Neel Kashkari Rejects Trump’s Charge That the Fed Is Beholden to Obama.”
32. Quoted in Appelbaum, “Fed Official Says She Favors ‘Prudence’ in Raising Interest Rates.”
33. Quoted in Jopson and Fleming, “Fed Challenged over Governor’s Clinton Ties.”
34. Blinder, “The Evolving Political Economy of Central Banking.”
35. Metzger, “Through the Looking Glass to a Shared Reflection.”
36. Levitin, “The Politics of Financial Regulation and the Regulation of Financial Politics,” 2049–52.
37. A. Baker, “Restraining Regulatory Capture?”; Young, “Transnational Regulatory Capture?”
38. Cukierman, Webb, and Neyapti, “Measuring the Independence of Central Banks and Its Effects on Policy Outcomes.”
39. Kirshner, Monetary Orders.
40. Mcnamara, “Rational Fictions.”
41. Posen, “Central Bank Independence after the Inflation Is Gone.”
42. Conti-Brown, The Power and Independence of the Federal Reserve.
3. The Culture of Central Banking
1. Geertz, The Interpretation of Cultures, 89.
2. Leach, Custom, Law, and Terrorist Violence, 21 (“whether we rate any particular item of behaviour as being that of a hero or a prophet, a madman or a criminal, will depend upon the context in which the judgment is made”).
3. Geertz, The Interpretation of Cultures (arguing against the view of culture as a “super-organic”).
4. Although this is sometimes described as an effect of globalization, anthropologists in fact insist that there was probably never a society in which this was not already true.
5. See Riles, “Comparative Law and Socio-legal Studies,” 806.
6. Gupta and Ferguson, Anthropological Locations; Tsing, Friction; Riles, “Introduction: In Response.”
7. Wagner, The Invention of Culture, 3.
8. Leach, Custom, Law, and Terrorist Violence.
9. Wagner, The Invention of Culture, 16.
11. Conti-Brown, The Power and Independence of the Federal Reserve, 13.
12. Riles, Collateral Knowledge.
13. Posen, “Central Bank Independence after the Inflation Is Gone.”
14. Helleiner and Pagliari, “The End of an Era in International Financial Regulation?,” 180.
15. For example, Stacey Steele explores how differing “bankruptcy cultures” (including both the laws and judicial institutions and social attitudes toward bankruptcy) lead to different outcomes in bankruptcy litigation involving the same clauses of the International Swaps and Derivatives Association (ISDA) master agreement brought in different jurisdictions. Steele, “The Collapse of Lehman Brothers and Derivative Disputes.”
16. Riles, Collateral Knowledge.
17. Biggart and Beamish, “The Economic Sociology of Conventions”; cited in Katzenstein, “Panel: The Politics of Central Banking.” Meg Doherty Bea in her literature review paper also develops the idea that central banks and bankers are part of a community that shares experiences and cultures. This shared background leads to similarities in the policies, strategies, and actions central banks adopt. Doherty Bea, “Constructing and Maintaining Legitimacy,” 6–9.
18. Dezalay and Garth, The Internationalization of Palace Wars.
19. Tett, The Silo Effect.
20. Abbott, The System of Professions; Abbott, “Boundaries of Social Work or Social Work of Boundaries?”; Douglas, How Institutions Think; Hogle, “Introduction: Jurisdictions of Authority and Expertise.”
21. See generally Tett, The Silo Effect; Masco, “Nuclear Technoaesthetics”; Fligstein, Brundage, and Schultz, “Seeing Like the Fed.”
22. For example, in the case of efforts to develop response capacities to biothreats, Andrew Lakoff argues that the U.S. government approaches biosecurity according to a historically specific “logic” for generating knowledge about disease drawn from the nuclear attack civil defense drills of the Cold War. Security agencies’ attempts to learn which vital national infrastructures are most vulnerable and to cultivate preparedness disasters by conducting rehearsal scenarios turn out to be inadequate because the experts involved in their creation are only able to predict scenarios based on their own narrow field of expertise. These preparedness exercises have proven highly ineffective for real crises such as SARS or the East Japan earthquake where the crisis is multifaceted or could not be extrapolated from past models. See Lakoff, “From Population to Vital System.”
23. Dezalay and Garth, The Internationalization of Palace Wars.
24. Gramsci, “The Formation of the Intellectuals.”
25. Ahamed, Lords of Finance.
26. Stiglitz, The Euro, 9–10.
27. The practitioner literature is, ironically, far more agnostic about the predictive value of science than the purely academic one. Kiyohiko Nishimura argues that we should “take proper account of our intellectual limitations in modeling the real economy, and at the same time, we should be practical in coping with the many-faceted problems of financial crises.” See Nishimura, “Macroprudential Lessons from the Financial Crisis,” 193.
28. Holmes, Economy of Words, 6.
29. Holmes, 12.
30. Riles, Collateral Knowledge.
31. Jasanoff, Designs on Nature; Hogle, “Introduction: Jurisdictions of Authority and Expertise”; Wayland, “Contextualizing the Politics of Knowledge”; Cohn, “Sex and Death in the Rational World of Defense Intellectuals”; Traweek, Beamtimes and Lifetimes.
32. Farquhar, Knowing Practice. Scholars working in the Foucauldian tradition speak of expert power as both “repressive and productive” because expertise goes beyond simply compelling action; it changes the way nonexperts imagine their world and think about their options within it. Foucault, The History of Sexuality, vol. 1; Canguilhem and Delaporte, A Vital Rationalist.
33. Mitchell, Rule of Experts. (British colonial officers in Egypt arrogantly believed in the universal relevance of British property law.)
34. See Galeoto, Bitar, and Rudolph, “The Consumer Financial Protection Bureau,” 702.
35. Hence some new work focuses on the intersection between financial regulation and consumer protection law. Ali, Consumer Financial Dispute Resolution in a Comparative Context; Kennedy, McCoy, and Bernstein, “The Consumer Financial Protection Bureau.”
4. Culture Clash
1. Tognato, Central Bank Independence, 9.
2. Tognato, 3.
3. Stiglitz, The Euro, 35.
4. On different forms of capitalism and their political implications, see Konoe, The Politics of Financial Markets and Regulation.
5. C. Baker, “The Federal Reserve’s Use of International Swap Lines.”
6. Funke, Schularick, and Trebesch, “Going to Extremes”; quoted in Gould, “Why Is Populism Taking over the Republican Party?”
7. Tewksbury and Rittenberg, News on the Internet, 6.
8. Scheurer, “The Federal Reserve Is Dealing Financial Drugs.”
5. Toward Financial Citizenship and a New Legitimacy Narrative
1. Anti-Defamation League, “Jewish ‘Control’ of the Federal Reserve: A Classic Anti-Semitic Myth.”
2. In this sense, I intend something very different by “financial citizenship” than the use of the term as a “slogan by financial literacy advocates who mourn record levels of personal debt as a social failure to instill a sense of pecuniary responsibility, and proper knowledge of financial products in the public.” Kear, “Governing Homo Subprimicus,” 937.
3. Goodhart, “The Constitutional Position of an Independent Central Bank,” 192.
4. Riles, Collateral Knowledge.
5. Subbarao, “G 20 and India.”
6. Sørensen, “Banking on the Nation,” 329.
7. Sørensen, 345.
8. I am grateful to Paul Tucker for this framing.
9. Desan, Making Money.
6. A Program for Action
1. Shelton, “Trump Is Right to Take Aim at the ‘Political’ Fed.”
2. Stiglitz, The Euro, 153.
3. See Bytheway and Metzler, Central Banks and Gold.
4. Pistor, “A Legal Theory of Finance,” 320.
5. Posen, “Central Bank Independence after the Inflation Is Gone”; Posen, “Why Central Bank Independence Does Not Cause Low Inflation.”
6. Tucker, “The Credit Crisis.”
7. Ahamed, Lords of Finance.
8. Velthuis, “Making Monetary Markets Transparent,” 324.
9. Scholars in science and technology studies have noted and critiqued a similar set of assumptions in the way scientists engage the general public. See, e.g., Hilgartner, “The Dominant View of Popularization”; Sismondo, An Introduction to Science and Technology Studies, 170–74.
10. Archer, “A Coming Crisis of Legitimacy?,” 86.
11. Holmes, Economy of Words, 1.
12. See the section “Mundane Technical Details Are Value-Laden” in chapter 3 of this volume.
13. Trachtman, “The International Law of Financial Crisis”; Kelly, “Financial Crisis and Civil Society.”
14. Beckert, “Capitalism as a System of Expectations,” 324.
15. See Drezner, All Politics Is Global, 19 and Andrews et al., “Financial Interdependence and the State,” 505. (“Government leaders choose to respond to particular circumstances in particular ways; their choices are influenced by existing constellations of economic and political forces and at the same time alter (sometimes significantly) those constellations.”)
16. Callon, “Introduction: The Embeddedness of Economic Markets in Economics”; see also MacKenzie, “An Equation and Its Worlds”; Lépinay, Codes of Finance; Power, Ashby, and Palermo, “Risk Culture in Financial Organisations”; Muniesa, “Performing Prices”; Beunza, “Tools of the Trade”; Holmes, Economy of Words, 4.
17. Carruthers and Kim, “The Sociology of Finance,” 251.
18. Tett, “The Inflation Enigma Needs Unorthodox Answers.”
19. Tognato, Central Bank Independence.
20. Beckert, “Capitalism as a System of Expectations,” 324.
21. Social studies of finance demonstrate how “concrete social networks and relationships” are at the heart of financial institutions and arrangements from venture capital to bank loans to exchange-based trading. See Carruthers and Kim, “The Sociology of Finance,” 249. The economic theory of rational expectations has been critiqued by John Maynard Keynes, who argued that expectations cannot be uniquely correct, since our existing knowledge does not provide a sufficient basis for a calculated mathematical expectation. Beckert, Imagined Futures, 46; quoting Keynes, The General Theory of Employment, Interest, and Money, 147. See also Buchanan, “The Market as a Creative Process.”
22. New sociological research helps us to understand more precisely why neoclassical economics fail at this moment. Michel Callon has shown how markets become “calculable”—how the givens of mathematical calculation that make economics and hence finance work, a field of knowledge, actually depend on a quite precarious set of institutional, conceptual, and social arrangements. See Callon, “Introduction: The Embeddedness of Economic Markets in Economics,” 46. (“Market laws are neither in the nature of humans and societies—waiting for the scientist, like a prince charming, to wake and reveal them—nor are they constructions or artifacts invented by social sciences in an effort to improvise simple frameworks for explaining an opaque and complex reality.”) The implication is that when these sociomaterial conditions begin to shift, even in small ways, the logic and rationality of markets can quickly unravel.
23. One marginal but interesting exception: former governor of the Bank of New Zealand Arthur Grimes has engaged in amateur anthropological analysis, somewhat tongue in cheek, to reflect on the misunderstandings of central bank actions by the public. Grimes, “Monetary Policy and Economic Imbalances.”
24. Gilens and Page, “Testing Theories of American Politics,” 564.
25. See Warren, “The New Economics of the American Family,” 1. (“Academic discourse is far too often about a forest with no trees, that is, a bankruptcy system in the abstract, unburdened by the details of real families in trouble.”)
26. See, e.g., Hefeker and Neugart, “The Influence of Central Bank Transparency on Labor Market Regulation,” 18.
27. Carruthers and Kim, “The Sociology of Finance,” 246.
28. See Tett, Fool’s Gold, 252. (“What social anthropology teaches its adherents is that nothing in society ever exists in a vacuum or in isolation. Holistic analysis that tries to link different parts of a social structure is crucial, be that in respect to wedding rituals or trading floors.”)
29. See, e.g., Buckley, “How East Asia Could Amplify Its Voice in Global Economic Governance”; Arner and Schou-Zibell, “Asian Regulatory Responses to the Global Financial Crisis.”
30. Maurer, “Resocializing Finance?,” 66.
31. See, e.g., Rudnyckyj, “Economy in Practice.”
32. Kingsford-Smith and Dixon, “The Consumer Interest and the Financial Markets.”
34. McGinnis, Accelerating Democracy.
1. Archer, “A Coming Crisis of Legitimacy?,” 86.
2. Hage, Against Paranoid Nationalism.