Shifting from Central Planning to a Decentralised Economy: Do we Need Central Banks?
by Professor Richard A. Werner, D.Phil. (Oxon)
Paper presented at the 14th Rhodes Forum: Dialogue of Civilisations Research Institute,
Panel 2: Economic Alternatives when Conventional Models Fail
on 1 October 2016
I. The Central Bank Narrative
For more than the past four decades, public policy discourse, especially when touching on macroeconomic and monetary policy, has been dominated by the views held and actively sponsored by the central banks, particularly in Europe and North-America, as well as Japan.
Their policy narrative has been consistent over time and virtually identical between central banks, which is why I shall refer to it collectively as the ‘central bank narrative’. It has been mirrored in the type of economics that central bankers have supported and that has indeed subsequently become dominant in academia and among the economists selected as the experts of choice in the major newspapers and television channels: the theoreticians advancing neo-classical economics.
This central bank narrative (and hence also the dominant neo-classical economics, also known as ‘mainstream economics’) has at least five major pillars, which I shall list briefly: