Central Banking

Central banks possess and utilise an element of economic rationality in the anarchical world of capitalist finance and accumulation. Consequently they have long been the object of the reformist zeal of credit practitioners and political radicals. They have also been subjected to withering criticism by those who think that the inherent instability of capitalist accumulation originates in money and finance. This chapter argues that there are narrow limits to the effectiveness of central bank operations determined by capitalist accumulation. That is not to negate the element of conscious policy-making and the possibility of partial success of central bank operations. However the crisis-ridden character of the capitalist economy cannot be abolished by central banking, regardless of the experience of the central bankers and the erudition of their economic advisers.