Are we all Lisa Cook? Central Bank Independence and the Politics of Depoliticization
by Pavlos Roufos
04.12.2025
Recent authoritarian attacks on central bank independence have provoked a fierce defence of this institutional form not only as an anchor of economic stability, but as a foundation of democratic rule. Below, political economist Pavlos Roufos argues that such a depiction obscures its actual historical trajectory and reinforces the false belief that we must choose between technocratic insulation and authoritarian intervention. A closer look, he suggests, calls into question whether defending central bank independence makes sense at all.
The contemporary authoritarian shift observed across the globe – led most visibly by the Trump administration in the United States – has amplified state cruelty, undermined the rule of law, and eroded trust in the resilience of democratic checks and balances. More than anything else, ours appears as a transitional era, structured around relentless challenges against existing institutions and a widespread sense of uncertainty. Ours is also an era of profound confusion, exacerbated by algorithmically designed distraction. In the context of such a dizzying bundle of uncertainties, the desire to return to a nostalgically constructed past ‘normality’ acquires particular force.
Recent responses to authoritarian challenges on central bank independence represent an exemplary case of this dynamic. Central bank independence is not a democratic alternative to authoritarianism, but an institutional form historically grounded on the insulation of monetary policy from democratic structures. Maintaining a misleading conceptualization of CBI as concomitant with democratic rule can only result in the reproduction of a framework largely responsible for the present predicament.
Central Bank Independence (CBI) as Uncontested Good
Trump’s repeated jabs at the US Federal Reserve—undermining its chair Jerome Powell and attempting to fire Fed Board Member Lisa Cook—have provoked outrage across the global community of central bankers, economic analysts and liberal commentators. And we are cordially invited to share this outrage.
According to Bundesbank President Joachim Nagel, independence is part and parcel of the “DNA of central banks,” a critical anchor of stable markets whose erosion brings “global risks.” Investment researcher William M. Cunningham informed us in the magazine American Banker that CBI has long been a cornerstone of price stability, an institutional guarantee of “long-term economic health,” and a crucial defence mechanism against “hyperinflation, currency devaluation and economic crises.” The Economist lambasted “the insidious threats to central bank independence …by meddling politicians,” setting the stage for David Wessel, Director of the Hutchins Center for Fiscal and Monetary Policy, to describe Trump’s gestures as “undermining the foundations of our democracy,” adding that “history teaches that when central banks fall under political control, the consequences are severe”. American economist and Nobel laureate, Paul Krugman’s rallying cry, “We Are All Lisa Cook”, emerges as the appropriate cherry at the top of this wonderful cake.
The Anti-Democratic Interwar Roots of CBI
Since the end of the 1990s, CBI has been the dominant institutional set up of the lion’s share of central banks across the globe. Justifications for CBI drew overwhelmingly from literature which expanded dramatically after the 1970s energy crisis and resulting decade of ‘stagflation’ (high inflation coupled with high unemployment). This literature chastised political authorities’ tendency to undermine price stability due to their inherent prioritization of short-term electoral goals. CBI thus emerged as the optimal, safe and long-term solution.
Hidden behind this seemingly ‘common-sense’ narrative is the actual historical emergence and trajectory of CBI, which emerged during the interwar years as a response to the concurrent collapse of the global monetary order of the gold standard and, crucially, the advent of mass democracy.
As Polanyi noted in The Great Transformation, the gold standard, one of the key pillars of the pre-1914 world, had become destructive for both labor and capital. Yet, the world of haute finance remained too entangled within this framework and its purported ‘political neutrality’ to abandon it without a fight. Faced with the incompatibility between mass democracy and maintaining the gold standard (as described by economists Eichengreen and Temin in 1997), officials within nation-states and international institutions began promoting CBI as a temporary institutional arrangement that could fulfil three simultaneous objectives: deprive democratic governments of discretionary powers over monetary policy; curtail rising demands for expansionary fiscal policies; and, lastly, provide an institutional return path for the eventual re-instatement of the gold standard.
‘Lords of Finance’ like Montagu Norman of the Bank of England and Benjamin Strong of the US Fed adapted their voices to the tune of international monetary conferences organized by the League of Nations – such as the Brussels and Genoa conferences of 1920 and 1922 – and vigorously promoted CBI as the optimal institutional setup for insulating monetary decisions from mass democracy and its so-called inherent inflationary bias. Though elements survive until today in more sophisticated forms, outright hostility towards mass democracy was, at the time, entirely explicit. Shocked by the forceful entrance of the ‘masses’ into the newly contested public space, CBI proponents joined the widespread chorus of fellow liberals and conservatives and openly decried the destabilizing forces of ‘excess democracy’ and the threats it posed for the world of capital and private property.
The 1970s Reframing of CBI as Democratic Foundation
Despite various interwar attempts, the turbulence caused by the Great Depression, shifts towards protectionism and the proliferation of visions of ‘planned economies’ undermined the potential for a wider adoption of CBI. Moreover, the aftermath of World War II saw both widespread support for liberal democracy (often presented as a counterexample to Soviet totalitarianism) and the proliferation of a macroeconomic framework of fiscal and monetary coordination that had no space for independent monetary bodies. With the potential exception of the German Bundesbank, no postwar central bank enjoyed ‘institutional loneliness’. Monetary decisions (primarily centred around credit policy) had to be embedded within wider fiscal, industrial and welfare targets.
A cursory examination of that period challenges the incredible (i.e. with little credibility) mantra which portrays CBI as an indispensable fortification against economic instability. Not only do such portrayals tend to focus on historically exceptional moments of monetary collapse (most notably, the interwar German hyperinflation of 1923), they glaringly ignore the impressive stability that took place in the two decades after the war—remarkable growth rates and noticeable inequality reduction—a period characterized by the complete absence of CBI.
It is not difficult to piece together the reasons why CBI-promoting publications proliferated towards the mid-1970s. Renewed interest in this institutional form was sparked by the return of a turbulent and socially explosive period, a generalized crisis that was also blamed on ‘excess democracy’ (something largely forgotten today). Having shed its anti-democratic, interwar origins, CBI came to be defined, as Wessel would claim 50 years later, as “a foundation of our democracy.” The re-conceptualization was, by all means, impressive. It was underpinned by a neoliberal framing of democracy that decomposes class relations in favor of the abstract individual endowed with standardized consumer rights. As a consequence, non-majoritarian technocratic institutions become the (rational) voice of the majority and, as the social scientist Philip Becher and his colleagues pointedly note, “anti-democratic tendencies are portrayed as genuinely democratic, whereas democratic advances are depicted as totalitarian threats.”
The Discursive Transformation: CBI as Democratization
The success of this transformation hinges on the key concept of ‘depoliticization’ and the underlying work it has performed in the time since. By superficially adopting expressions of discontent towards formal politics during the 1970s , proponents of CBI successfully portrayed the placing of limits and constraints on ‘political interference’ (i.e. democratic control) as tools of democratization. In this contextshort-sighted politicians (and, by definition, the equally unsuitable public) access to important decision making, insulated technical expertise should take charge. In this context, the previous conviction about the inherent inflationary bias of democratic society was also discursively reformulated: it is actually inflation, we are told today by ECB president Christine Lagarde, that “kills democracy”. This is why we are all suddenly Lisa Cook.
Progressive and left-wing commentators aware of this historical trajectory are, however, still faced with a dilemma: even while recognizing CBI as a bulwark of neoliberal depoliticization and a form of class politics, surely one cannot embrace authoritarian attempts of politicization? “If central bank independence serves finance,” asked Ümit Akçay, “should the left side with the populists who want to end it?”. Along similar lines, economic historian Adam Tooze pointed out that while Krugman’s call to identify with Lisa Cook in defending “our democracy,” is “silly,” it is also “painfully true.”
Can Central Banks be Democratized?
A potential way out of this dilemma would be to question its construction. Describing authoritarian attacks on CBI as politicization betrays an inadvertent support for the concept of depoliticization. This is more than a discursive slip. There is no such thing as depoliticized monetary policy, but neither are authoritarians interested in exposing it to democratic or social pressure. CBI’s ‘depoliticization’ reflects the deeply political choice to insulate monetary policy from democratic meddling. But it also represents an institutional response to the potential existence of such meddling. Authoritarian or fascist regimes, on the other hand, have no interest in such institutional insulation. Authoritarianism is associated with the suspension of legal procedures, repression, and the normalization of cruelty.
Responding to authoritarian developments by defending a historically anti-democratic institution makes little sense. At the same time, however, progressive calls to democratize money and central banks (Downey 2025; Monnet 2024) continue to uphold the need for (monetary) technical expertise as inevitable, forgetting that social and economic relations are a field of political and class contestation, not one of expertise. Reproducing such a disconnect between the political and the monetary fields inadvertently strengthens the neoliberal euphemism of depoliticization. At the same time, a nostalgic reconstruction of the postwar era of fiscal and monetary coordination can also be misleading as a democratisation alternative. Despite its divergence from CBI, there is nothing inherently democratic about this macroeconomic framework—it was as much adopted by authoritarian regimes (like postwar Greece) as it was by social-democratic ones.
If democratization is to have any substantial meaning, it can only be in opposition to the totality of capital’s rule—and that includes the artificial separation of the economic and the political.
Pavlos Roufos is a political economist working on the history of neo- and ordoliberalism, central banks, constitutional law and global governance.
References
- Becher, Philip; Becker, Katrin; Rösch, Kevin & Seelig, Laura (2021) ’Ordoliberal White Democracy, Elitism, and the Demos: The Case of Wilhelm Röpke’, Democratic Theory, Vol. 8, Issue 2, Winter 2021, pp. 70-96
- Downey, Leah (2025) Our Money: Monetary Policy as if Democracy Matters, Princeton University Press
- Eichengreen, Barry J & Temin, P (1997) ‘The Gold Standard and the Great Depression’, Working Paper 6060, National Bureau of Economic Research, Massachusetts
- Monnet, Eric (2024) Balance of Power: Central Banks and the Fate of Democracies, University of Chicago Press
