Prof Robert Elgie's Inaugural Lecture

Bringing the People Back In: The European Central Bank and the Democratic Deficit
Professor Robert Elgie

Conclusion

Politics is about beliefs, opinions, ideologies and convictions. Politics is about what people think is right and what people think is wrong. In short, politics is about values. To my mind, though, the study of politics must be different. The study of politics, I believe, must be value-free. As academics, we must avoid studying politics so as to try to 'prove' the validity of our own beliefs, or so as to try to show that our side is right and the other side is wrong. Instead, as academics, we must be disinterested and we must choose our methodologies accordingly. We must be prepared to be critical, but our criticisms must be derived from a essentially value-free perspective. we must not pre-judge.

In this context, it is clear that the ECB is currently at the centre of a highly sensitive economic and political debate. I believe that principal-agent theory helps to elucidate the positions of both the supporters and the critics of the Bank in this debate and that it helps to propose realistic ways in which the Bank's operations could be democratised if this is considered to be necessary. Moreover, I believe that principal-agent theory helps us to do these things in a value-free way. As such, it is a core tool of what I hope will be the new science of politics.

References
Duisenberg, Wim (1998), Hearing of Mr Wim Duisenberg, President designate of the European Central Bank, European Parliament, 7 May,
http://www.europarl.eu.int/dg7/hearings/en/ecb/01.htm.

Duisenberg, Wim (1999a), Hearing at the European Parliament's Sub-Committee on Monetary Affairs, European Parliament, 19 April, http://www.ecb.int/key/st990419.htm. Duisenberg, Wim (1999b),

Press Conference, European Central Bank, 8 April, http://www.ecb.int/key/st990408.htm.

McCubbins, Mathew D.(1985), 'The legislative design of regulatory structures', American Journal of Political Science, vol. 29, no. 4, pp. 721-48.

Moe, Terry M. (1984), 'The new economics of organization', in American Journal of Political Science, vol. 28, no. 4, pp. 739-77.

Ross, Stephen A. (1973), 'The economic theory of agency: The principal's problem', American Economic Review, vol. 63, no. 2, pp.

134-39. Westlake, Martin (1998), 'The European Parliament's Emerging Powers of Appointment', in Journal of Common Market Studies, vol. 36, no. 4, pp. 431-44.

read on...
1. The basic assumptions of principal-agent theory
2. Supporters and critics of the ECB
3. The reform of the ECB
In Conclusion