The 2008 financial crisis was a watershed moment for the world’s central banks and their central bankers. Long seen as old boys’ clubs of bland technocrats, they suddenly found themselves in newspaper headlines and the speeches of populist politicians. The debates were not about standard central banking fare – tweaking interest rates to manage inflation – but equality, fairness and democracy.
It was about time, argues Annelise Riles in “Financial Citizenship: Experts, Publics, and the Politics of Central Banking” (Cornell University Press, 2018).
“Financial governance involves trade-offs: benefits for some and costs for others,” she writes. “That makes it highly relevant to ordinary people’s daily lives.”
Riles, the Jack G. Clarke Professor of Law in Far East Legal Studies at Cornell Law School and a professor of anthropology, makes her argument in a digitally enriched e-book published by Cornell’s Mario Einaudi Center for International Studies on an experimental platform that encourages readers to make their own voices heard.
Riles acknowledges that between crises, few nonspecialists pay attention to monetary policy or public finance. Those who do tend to see central bankers either as wizards with mysterious powers or as inside players in a system that is rigged in favor of the rich and powerful.
She argues that the truth is more complex than that, and that bankers, their critics and the general public would all benefit from a little more time together.
“The next financial crisis is coming – we don’t know exactly when or where it will begin, but we know it is coming,” Riles said. “In the book, I argue that citizens have a right – even a duty – to engage in debates with central bankers about monetary and regulatory policy. The legitimacy of central banks depends on central bankers engaging much more with the public about the difficult trade-offs in what they do.”
Riles calls for “a new kind of institutional arrangement, or platform, for engagement … across the cultural divides that separate experts and nonexperts, government officials and civil society.” She provides several suggestions for how such a platform might work.
The book is itself the product of engagement across cultural and disciplinary divides. The central arguments emerged from a series of seminars, workshops, conferences and online discussions organized by the Einaudi Center’s Global Finance Initiative and Meridian 180, an 800-member organization that Riles founded in 2012. Participants ranged from social scientists and legal scholars to businesspeople, activists, bureaucrats and students.
The general consensus was that monetary policy is not just a technical issue, but also a cultural, moral and political one. “The core message of this book is that finding a way to manage the culture clash that permeates policy around central banking is vitally important,” Riles writes.
She argues that experts – whether they are doctors, engineers or central bankers – tend to see the world through the lens of their own professional and social group. This can be particularly problematical when they wield substantial power over others. “While expertise is real and necessary, it entails not just technical choices but ethical and political choices,” Riles writes.
The onus is on both bankers and the public to ensure that those choices are openly debated. “The cultural rift that separates policymakers from the people who make up the so-called real economy cannot be repaired from one side alone,” she writes. “Citizens also have a duty to challenge policymakers constructively, to help rethink the givens by bringing new perspectives into the discussions, and to engage with hope rather than cynicism or desperation.”
Riles, who has spent time in academia, civil society and the financial world, guesses that there may be more common ground than people think.
“Not only are most central bankers not partisan, but many of them share some of the citizenry’s core concerns about financial regulation,” she writes. “Many central bankers are in fact highly critical of the motivations of large financial players and concerned about the economic welfare of ordinary citizens. There is more room for dialogue across our cultural differences than we might expect.”
“Financial Citizenship” is available at no cost as a digitally enhanced e-book via Einaudi Center Digital Publications. It is accompanied by more than 40 videos, documents and links, ranging from talks given by central bankers at Cornell to YouTube explainer videos and working papers by graduate students. The site, built on the new Manifold platform for academic publishing, allows users to make public or private annotations – essentially letting readers carry on discussions in the margins.
“I am really excited about the potential of this new platform to foster a serious, meaningful and detailed conversation with our students, with policymakers and with representatives of the larger public,” Riles said.
The book is also available for free download in a text-only version on Cornell University Press’ Cornell Open site. It will be published in July by Cornell Global Perspectives, the Einaudi Center’s new imprint with Cornell University Press, where it will be available in paperback for $14.95. Established in December 2017, Cornell Global Perspectives publishes accessible, nontechnical works on complex international topics.
Jonathan Miller is associate director for communications at the Einaudi Center.