Technopopulism and Central Banks

Abstract

In recent years, warnings of a populist threat to central bank independence have proliferated. These warnings are based on a deep-seated antagonism between technocracy and populism.

I argue that to understand current challenges for central banks, we should question the assumed antagonism between populism and technocracy. Political scientists Chris Bickerton and Carlo Accetti (2021) claim that advanced democratic states today are in a technopopulist age, “increasingly ordered around the combination of appeals to the people and to expertise and competence” (pg. 157). This paper discusses central bank independence in the technopopulist age. First, I describe the inherent tension around the role of expertise in a democracy, and how this tension has been approached in the delegation of monetary policymaking to independent central banks. Next, I discuss the transition from an era of ideological political logic to the current era of technopopulism. Then I explain how the technopopulist influence is especially evident in recent pressures on central banks, changes in central bank communication, and recent amendments to the Federal Reserve’s longer-run strategy. An important point is that under technopopulism, populists do not reject technocratic expertise, but instead rely on it to translate their causes into policy. Central banks thus face pressure to use their technocratic discretion to do more to serve the people, and to be directly accountability to the people rather than to elected representatives. In return for greater responsiveness, they gain even greater power and discretion.

Keywords: Federal Reserve, central banks, central bank communication, populism, technopopulism, discretion, democracy

JEL Classification: E30, E40, E50, E52, E58