Leah Downey

How the creation of money and monetary policy can be more democratic The power to create money is foundational to the state. In the United States, that power has been largely delegated to private banks governed by an independent central bank. Putting monetary policy in the hands of a set of insulated, nonelected experts has fueled the popular rejection of expertise as well as a widespread dissatisfaction with democratically elected officials. In Our Money, Leah Downey makes a principled case against central bank independence (CBI) by both challenging the economic theory behind it and developing a democratic rationale for sustaining the power of the legislature to determine who can create money and on what terms. How states govern money creation has an impact on the capacity of the people and their elected officials to steer policy over time. In a healthy democracy, Downey argues, the balance of power over money creation matters. Downey applies and develops democratic theory through an exploration of monetary policy. In so doing, she develops a novel theory of independent agencies in the context of democratic government, arguing that states can employ expertise without being ruled by experts. Downey argues that it is through iterative governance, the legislature knowing and regularly showing its power over policy, that the people can retain their democratic power to guide policy in the modern state. As for contemporary macroeconomic arguments in defense of central bank independence, Downey suggests that the purported economic benefits do not outweigh the democratic costs.

Monetary Policy as if Democracy Matters

Our Money

Rebecca Henderson

Danielle Allen

Yochai Benkler

Joshua Simons

"If we all agree that our current social-political moment is tenuous and unsustainable (and indeed, that may be the only thing we can agree on right now), then how do markets, governments, and people interact in this next era of capitalist societies? In A Political Economy of Justice, a team of luminary social scientists consider the strained state of our political economy in terms of where it can go from here. "We look squarely at how normative and positive questions about political economy interact with each other," the editors write. "From that beginning, we aspire to chart a way forward to a just economy." Across 14 essays that blister with relevance to our moment as a society and polity, A Political Economy of Justice sketches the boundaries of a new theory of justice: the measures of a just political economy; the role of firms; the roles of institutions and governments. The editors' introduction makes clear that these are no half-effort book chapters from busy luminaries; they are wholly original works born of a set of guiding principles and deeply, communally edited. The result, they hope, is something greater than what is typically achieved by an academic volume"--

Leah Downey

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