The Athenian boule was not democratic embroidery, like a modern-day focus group. It had real power. It decided which proposals were taken to the public assembly and which were lawful. Brett Hennig calls it the “nerve centre of power” in ancient Athens. 40  The boule had wide public acceptance and attendance. Participation in public life, through the boule or public assembly, was an accepted part of Athenians’ civic responsibilities. Those not taking part were termed idiotes, from which the modern word idiot derives. The infrastructure was far from perfect; the boule excluded women, slaves and non-citizens. But it was notable in seeking to strike a balance between the two features subsequent research has shown to be crucial for effective, representative decision-making in complex environments: diversity and deliberation. 41  Indeed, for that reason some have called the Athenian model of decision-making a deliberative democracy. Diversity of decision-making was achieved by calling on a rotating, randomly-selected pool of non-expert citizens, augmented by experts in a limited number of positions. Deliberation in decision-making was achieved by restricting the number of representatives, having them convene and discuss regularly and agree on a set of proposals. The Council of Five Hundred sits slap bang in the middle of the optimal range of people suggested by Wagner and Vinaimont. The Greek Empire of course did not last. Nor did its model of deliberative democracy for decision-making. In the period since, two alternative models of representative decision-making have risen to prominence.

A long-term, credible commitment to meet the inflation target also reduces uncertainty when assessing future income, which ultimately determines the (fundamental) value of various types of asset, such as shares. The larger the risk that one will not receive one’s invested funds plus the desired return on the investment, the greater the compensation one requires for investing/lending one’s money. Compare, for instance, with the situation in Sweden during parts of the 1980s (after deregulation) when the system of tax relief on interest, combined with inflation shocks, meant that in principle one could earn money by borrowing while it cost money to save! The conditions for making wise economic decisions will thus become better when the price stability target has been met. The same reasoning can be applied to wage-setting. During the 1970s and 1980s wage-earners were repeatedly forced to make large demands for nominal wage increases as inflation was “eating up” their purchasing power. Real wage increases were almost non-existent, while nominal wage increases pushed up prices, resulting in recurring cost crises. A low, stable inflation rate provides entirely different conditions for more stable and better developments in real wages. Monetary policy and the stock market As I have the privilege of speaking to a group of shareholders, I would like to take the opportunity to make a small digression into the connection between monetary policy and the stock market. I have already mentioned that a low, stable inflation rate creates good conditions for favourable economic growth and long-term developments in the stock market.