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The Concept of Trust and the Political Economy of John Maynard Keynes, Illustrated Using Central Bank Forward Guidance and the Democratic Dilemma in Europe

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  • Jamie Morgan
  • Brendan Sheehan

Abstract

Trust is an issue to which Keynesians and post-Keynesians have paid relatively little attention. However, properly understood it is an aspect of almost all activity, including key elements of socio-economic reality. Without trust, market exchange is at the very least problematic, if not impossible. Moreover, trust is intrinsic to a variety of issues with which Keynes, and subsequent Keynesianism have been concerned. In this paper we provide a general social theory conceptualisation of trust and then set out some of the areas where this concept resonates with the work of Keynes in terms of the role of conventions. Conventions quintessentially involve trust and that trust can be unstable, can be withdrawn and can require rebuilding. We illustrate this with reference to central bank policy and the Bank of England's introduction of Forward Guidance. Exploring the problem of trust in the context of banking also highlights a challenge for the continued relevance of Keynes' work. We now live in a neoliberal world and this provides a quite different context for state intervention than was previously the case. Keynes' work is now an argument for the alternative, and as such it requires more than a technical economic argument, it must also address the problem of trust in state policy-makers. We briefly illustrate the challenge this poses with reference to Europe.

Suggested Citation

  • Jamie Morgan & Brendan Sheehan, 2015. "The Concept of Trust and the Political Economy of John Maynard Keynes, Illustrated Using Central Bank Forward Guidance and the Democratic Dilemma in Europe," Review of Social Economy, Taylor & Francis Journals, vol. 73(1), pages 113-137, March.
    • Handle: RePEc:taf:rsocec:v:73:y:2015:i:1:p:113-137
    DOI: 10.1080/00346764.2014.988054
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    References listed on IDEAS

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    1. Ernst Fehr, 2009. "On The Economics and Biology of Trust," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 235-266, 04-05.
    2. Moran, Michael, 2007. "The British Regulatory State: High Modernism and Hyper-Innovation," OUP Catalogue, Oxford University Press, number 9780199219216.
    3. Harvey, David, 2007. "A Brief History of Neoliberalism," OUP Catalogue, Oxford University Press, number 9780199283279.
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    1. Jamie Morgan, 2023. "Systemic stablecoin and the brave new world of digital money," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 47(1), pages 215-260.

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