Too Embedded to Fail: the ECB and the Necessity of Calculating Europe

Abstract

Calling into question the meaning of "independence" in contemporary central banking, the present article investigates the social origins and post-crisis persistence of the European Central Bank's (ECB) core macroeconomic model, despite broad acknowledgement of its failure to anticipate the financial crisis. We trace the making of the model; the process by which it became dominant in European central banking and beyond; criticism in the wake of its failure to predict the financial-cum-Eurozone crisis; and its persistence, nonetheless, in the crisis’ aftermath. We argue that the formation, meanings, and persistence of the ECB's model cannot be understood as effects of the bank's independence or the model’s intrinsic qualities. Rather, the model's trajectory is best understood in light of the ECB’s transnationally embedded social location in international finance, professional economics, and European governing institutions. The necessity of calculating Europe, irrespective of the accuracy or predictive strength of the model being used, has less to do with the ECB's independence from domestic politics and more to do with its transnational embeddedness - or, stated differently, that the ECB is, in a sense, too embedded to fail.