The Bank of England and Neoliberal Inflation Politics in 'The Great Moderation'

Introduction Fear of inflation has re-entered popular discourse as an urgent concern in the wake of covid-19. The last time inflation was of urgent popular and academic significance came as the effects of the 1970's oil-crisis and 'stagflation' changed the political order in the Global North, upending the post-war Keynesian settlement. But since the end of the Cold War, and the institution of a raft of new central bank strategies to deal with inflation (in the UK, including 'inflation-targeting' policy (1992) and de jure central bank independence (1997)) it had been largely thought to have been 'tamed'. As such it has been hidden for almost 30 years as a salient political-economic concern. Repoliticising and reinterrogating these notional policy successes, this project will examine the creation of this set of 'stabilisation' (anti-inflationary) policies in the UK as a significant and peculiarly overlooked set of key neoliberal interventions by The Bank of England during 'the Great Moderation'. The 'success' of these stabilisation policies can be measured by the extent to which - in a now vast academic literature investigating the development of neoliberalism (Birch, 2017 gives a survey), their status as a particularly unquestionable set of neoliberalera policy prescriptions and interventions has largely been left
nexamined. Orthodox economic literature which examines monetary policy takes the view that low inflation was an unobjectionable goal successfully attained, albeit with debate about how (Benati, 2007). Meanwhile the literature which attempts towards an institutionally-grounded understanding of monetary policy-making, such as Kynaston (2017) or Capie (2010) does not situate policy within broader political-economic implications, but describes its development only in narrow institutional terms. Some recent work has considered the role that inflation has
played in a variety of cultural struggles. In the US, in its role in conflict over civil rights and welfare; aiding the construction of a shared 'pro-family' policy platform between neoconservatives and neoliberals (Cooper, 2018). Parallel work has identified the role it played in the UK in undergirding the racist and British-nationalist rendering of neoliberalism in the politics of Enoch Powell (Shilliam, 2021). However, inflation remains something of a background or framing concern in these latter analyses. Thus, the understanding of neoliberal stabilisation in the UK in terms of a concrete set of policy instruments, with a historical development and unfolding has not been sufficiently engaged. That which does exist (Best, 2019 and 2020) though valuable, only looks at a relatively narrow period in the early 1980's. Further, this work does not look at the intellectual and institutional processes which gave rise to it in any detail. Nor does it pay attention to the distributionary implications of these policy regimes, which favour certain sets of economic actors over others - a key insight of earlier political economy work around stability and inflation (e.g. Maier, 1987). Crucially, this work ultimately takes for granted the legitimacy of the stabilisationary project even if it problematises the methods used to achieve it. In this context this research engages the following issues: what factors - cultural, intellectual and material - led to stabilisation policy becoming the cornerstone of monetary orthodoxy in the way it did in Britain in the 1990s? Further, how did this become intellectually and institutionally entrenched into and beyond the year 2000? And how did the actors involved - especially central bankers- understand and conceive of this policy process, especially in regard to its political, social and distributional implications? Why and how were other ways of approaching monetary and fiscal policies ignored, sidelined and overlooked? And how did the stabilisation of 'the great moderation' mediate the political-economic shifts which took place in this period?