| Sumario: | In recent years, central banks have significantly altered their practices, widening the law–practice gap between their formal legal mandates and their actual policy conduct. Monetary conservatives call for a return to the old consensus on economic and constitutional grounds, whereas monetary populists call for the re-politicisation of money by returning monetary powers to elected officials. Although these positions oppose each other, both regard the current configuration as illegitimate because it departs from the governing principles of liberal democracy, regardless of its economic effectiveness. While economists have recognised the economic merits of this configuration, the political and legal criticism levelled against it by conservatives and populists has remained unanswered. This article offers such an answer. It contends that the present configuration of central banking is best understood as reflecting a Keynesian–Schumpeterian problem-solving model: independent yet activist, separate from government but not bound by rigid rules. The article argues that this model represents the most reasonable compromise between the legal and constitutional constraints of liberal democracies, the non-ergodicity of capitalist economies, and the shortcomings of representative democracy. This model draws on post-Keynesian economic assumptions, supply-side theories of democracy, and a Schumpeterian notion of technocracy.
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