ECB policy and preliminary notes on the inter-subjectivity of monetary affairs

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Mr. Mario Draghi, the president of the European Central Bank (ECB), has once again proclaimed the unflinching determination of his institution to maintain an accommodative monetary policy and to remain open to the possibility of further easing conditions, should accumulating downside risks necessitate such course of action. The decision was to be expected, given two of the most important parameters of the eurocrisis:

  1. the grinding depression/recession in some parts of the currency area in conjunction with the powerful headwinds on the fiscal front, which hamper the supply and circulation of media of exchange,
  2. the bank-dependency of Europe’s real economy; an economy that has yet to develop the appropriate nexus of interrelations for raising adequate financing from capital markets and which is instead forced to remain captive to the self-reinforcing feedback loop of enfeebled sovereigns and undercapitalized banks.

Couched in these terms, the ECB is certainly acting along the lines of what would be technically correct and it will continue to operate in a manner that will mitigate any existential threats posed to it or to the area it administers monetarily. That granted and assuming that the discussion does not place under scrutiny the very system of central banking, value judgments on the normative responsibilities of the ECB may only be limited to the means deployed for the attainment of the ends of keeping the Euro in tact, in an optimal and benign fashion to the extent possible. Besides and as a matter of fact, many are those, the present author included, who do—or are willing to—engage in controversial discussions over the role, function, principles and modalities of monetary policy in the Euro area. Variances of opinion aside, a topic which once concerned a handful of central bankers, economists, financiers and journalists has, courtesy of the present financial, economic and social-institutional crisis, become part of Europe’s nascent public sphere, in spite of the somewhat arcane technicalities peculiar to monetary affairs.

If, for the sake of examining the underlying factors of this reality, we are to distance ourselves from the fray of political-economic deliberations, we shall begin by noting that opinions in this and in any other context are profoundly determined by one’s vantage ground, suggesting that a subjective qua relative interpretation, concatenation and appraisal of events specific to the topic of consideration or inquiry, must be preceded by the formulation or establishment of interwoven complexes of mental devices and thought-figures that provide a basis for cognition; and, a fortiriori, persuasive, plausible or “truthful” descriptions of states of affairs are to be predicated upon firm logical-analytical foundations of a subjective or inter-subjective sort.

The economy is to be understood as an interweaving web of social-historical imaginary institutions and nominal properties of the lifeworld that are made manifest in complex ways, in combinations whose regularities are not determined by forces exterior to human. What the idealists of our era hypostesize as the robust objectivity of economic contemplations, that is to say, what they propound as the midpoint and benchmark of their investigations, the free market anchored on clear delineations between property rights and featuring rational agents who reap marginal gains to their activity and who collectively provide the microfoundations to clearing markets that concertedly engender cross-sectoral, inter-temporal equilibria, or which even yield a long-term general equilibrium, is to be understood as a phantasmagorised projection of one’s context-specific worldview to a decontextualized province of formal thought.

Time-preferences, values and tastes, price elasticities, praxis that occurs in the magnitudes of time and space, the originary interest of opportunity, capital concentration and structure, resource allocation, rationality as such, all being profoundly human qua relative properties, are fastened upon structures of metapolitically formulated conceptions of the “who”, the “what”, the “how” and the “why”; and they exist, in their specific form for as long as these schemas remain insulated from created-and-creating differentiation; and conversely, they shall experience marginal or cardinal change once—and for as long as—the realm of metapolitics undergoes internal adjustments, shifting the focal point of the primary structure on which tissues of significations are attached.

An understanding of the human world qua magma of inter-subjective, instituted realities that attain given-though-variable functions and ends, is consubstantial with the quest for clarity a skeptic has, in being aporetic and zetetic, both with respect to self-ness and to other-ness. The ubiquitous relativity of all things human, once acknowledged as the overriding element of the lifeworld, can foster certain doubts, which when analyzed remorselessly, shall lead one to expound on the vital importance a given historical-cultural milieu has on the effectiveness of one and any monetary policy.

A model for the administration of monetary affairs that is drawn out of the spatio-temporal web, and which is then used as a supracontextual authority to impose conditions and shape correlations, is to be understood as an exercise that is bound to failure in the absence of corresponding changes to the complexes of institutions it affects. By the same token, behavioral regularities occur against the backdrop of primary and secondary rules, tacit and explicit standardazations and systematizations of action and of perception, which themselves provide both the fundament upon which new instituted realities may be erected, and the very impetus for created-and-creating differentiation of this particular sort.

Monetary policy, as being confined to its contextuality, must factor into its system what appears to be the circular causality of inter-subjective institutions; the reciprocity of alteration engendered in the dynamic between instituting-and-instituted monads and instituted-and-instituting states of affairs. In this respect, the art of central banking amounts to little more than the molding of expectations, in adapting to the peculiarities and specificities of the world in which it is immersed and itself having a profound effect on certain aspects of that given-though-variable order.

The gist is that economics in general and monetary policy in particular, do not exist in a vacuum and cannot be truly appreciated outside the context that impregnated, fostered, shaped and determined their specifities in the ways that it did, for as long as it did, to the extent that it did. The theoretical ramifications notwithstanding, it is doubtful whether it is effective to use a phenomenality as an objective model, as the spectralized other of an ideal, that can or must be fully replicated in a context alien to the one that brought it about. Consequently and conclusively, the policy of the ECB must be regarded in relation to—or in light of—the metapolitical and historical-institutional states of affairs that permeate and penetrate all that there is in the appraising minds of those perceiving of it and of Europe.