Formalizing the Future: How Central Banks Set Out to Govern Expectations but Ended Up (En-)Trapped in Indicators

Resource Type
Text : Journal article
  • Walter, Timo
Collective Title
  • Historical Social Research / Historische Sozialforschung
    Vol. 44, No. 2 (2019)
Publication Date
Embargo End Date
Publication Place
  • GESIS - Leibniz-Institut für Sozialwissenschaften (Editor)
  • GESIS - Leibniz-Institut für Sozialwissenschaften
Free Keywords
Quantification; key indicators; Central banks; monetary policy; expectations; futurity; economic coordination; indicators; inflation targeting
  • Abstract

    Modern ‘inflation targeting’ monetary policy has been one of the prototypes of future-oriented modes of social coordination which in recent years have captured the sociological imagination. Modern central banking is commonly presented as achieving greater efficacy by directly managing economic expectations, in particular when contrasted with the previous heavy-handed, “hydraulic” transmission of policy objectives through systems of economic aggregates. Such empirical claims are mirrored in the theoretical distinction drawn by sociologists between the openness and efficacy of future-oriented coordination of expectations, and the more rigid coordination achieved through formal organizing and formalization. This paper uses the case of the US Federal Reserve’s (Fed) transition to inflation targeting in the 1980s to show how the precision and flexibility of social coordination through expectations in fact relies on extensive formalization and rigid proceduralization. I show that the tightly coupled control relation on which inflation targeting rests is not possible without the constitutive exclusion of other modes of representing and intervening the economy achieved by this formalization. However, the price for the robust and precise reactivity that modern central banking has constructed between key indicators of inflation expectations and the interest rate set by monetary policy is a comprehensive procedural dis-embedding of monetary policy from the structure of economic activities whose path into the future it is meant to govern. The paper concludes that in order to better understand the conditions under which future-oriented modes of coordination fail or succeed, we need to study more closely the formalization of social relations on which they are founded.
  • Series Information

    Historical Social Research / Historische Sozialforschung Vol. 44, No. 2 (2019): Special Issue: Governing by Numbers - Key Indicators and the Politics of Expectations.

    Starting Point and Frequency: Year: 1979, Issues per volume: 4, Volumes per year: 1

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    ISSN: 0172-6404
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Update Metadata: 2020-02-12 | Issue Number: 4 | Registration Date: 2019-03-14