Digging into economic arguments around austerity has been like accidentally walking in on a pub brawl: honky-tonk piano still playing, people being hit with chairs, others thrown the full length of the bar breaking all the glasses, someone thrown through the first floor balcony etc. Nobody gets this worked up about spatial economics.

I've been doing this digging since this little fantasy post about the idea of making austerity economics more visible (or, rather, making macroeconomics more visible, and so arguments about austerity more transparent). It's been a dream for a long while, probably since first discovering the MONIAC machine, the (currently not working) prototype of which sits in Leeds University's Business School foyer.

I've taken a few baby steps in that direction¹ - it may never come to anything, but the process of attempting it has churned up a whole load of economics stuff I haven't thought about in a long time.

I've found myself flummoxed by some of the things I'm seeing in the bar brawl. Exhibit A: Steve Keen's cartoon - taking the CON out of eCONomics! - from which we learn, apparently, that Krugman and Summers "don't know what they're talking about". Blam! Thwack! Keen's mode of operation may be extreme in heterodox circles but it seems to be wildly popular.

I've also just got a copy of James Kwak's 'Economism': so far, this has been a much more measured book with very little I disagree with. It acknowledges the power of economic thinking - but it paints a convincing picture of "economics 101 as ideology", captured and promoted by particular elites, turned into a propaganda tool. On my first skim, it doesn't recommend smashing everything to bits, but instead changing institutions, expanding and re-weighting curricula.

As it points out, the emergence of 'economism' can be seen just in how topics were re-ordered over time in Samuelson's textbook. It quotes a THES article...

"Economics degrees are highly mathematical, adopt a single narrow perspective and put little emphasis on historical context, critical thinking or real-world applications."²

...but notes that, once one gets past this highly standardised economics (largely harmonised with ideological economism), actually, there is a great deal of much more subtle economic thinking going on. It's just that students aren't initially exposed to it.

I don't know how true that is - I suspect economism of the sort pushed by Paul Ryan when he's showing woefully simplistic supply/demand curves to justify dismantling Obamacare (an example from the book) has a messier relationship to taught econ101. But the book's central claim - that there is a version of economics used as an ideological battering ram - is hard to argue with.

Self-indulgent background follows for several paragraphs... I'm in an odd, sort of lucky, sort of rubbish, situation: for the PhD model (finished 5 years ago now, oi...) I found some economic ideas incredibly useful. While I'm still pretty insecure on my views about this (it was just me in a dark room building a model for years and those ideas remain largely untested) I perhaps got a unique perspective, being forced through trial and error into finding how useful economic ideas can be, rather than having to learn and regurgitate the orthodox package.

I got to jump off the rails and go wandering freely. The model itself forced me to think critically and historically - I ended up running about randomly on the economic landscape, solely on the look-out for ideas that could move the model forward.

There were no stakes (besides me finishing the ****ing thing): I just found micro-economics really useful for modelling how people and firms react to cost changes if they're embedded in space, and that agent modellers' claims to better "realism" made no sense in isolation.

When it comes to austerity and macro-economics, obviously the stakes get a lot heavier - and much more ideological. Black-hole gravity wells of ideology can warp even the purest scientific disciplines so it's unsurprising what a mess it makes of economics.

Before the PhD, I started off with the same worldview as many heterodox economists. I'd studied politics at Sheffield and fully took on board the standard, incredulous dismissal of homo economicus, the perfectly rational calculating machine: insultingly reductionist, logically absurd (Friedman's "realism of assumptions don't matter" line, a caricature of his actual argument, would exemplify that idea) and nothing more than a figleaf covering the goolies of power.

I found the strongest confirmation of this in World Bank reports studied in my final year. One of them claimed the goal in developing countries should be to "supplant or amend" (change or die!) all "behavioural norms" that were "market dysfunctional" and replace them with the market-functional versions. It contained an entire "tactical sequencing" plan (divide and conquer!) to overcome state and societal resistance to this supplant/amend plan.

It looked for all the world like a strategy for creating homo economicus, for transforming entire states to achieve this. It's easy to assume reports like this reflect the Sauron-like power of neoliberalism, rather than just whatever the writer happened to think that day (as well as being just confirmation bias). But it does support the 'Economism' idea: global market norms are pushed by powerful organisations. And economics is the theoretical branch of that push.

On the academic side, you can also see how methods become shibboleths. As Krugman says, his geography ideas needed to be expressed as a general equilibrium model to be accepted:

"Mainstream economics isn’t going away: like it or not, the White House has a Council of Economic Advisers, not a Council of Geographical Advisers, the World Bank hires lots of economists and not many geographers."

The World Bank and other organisations have worked to recreate this same structure, including setting up and staffing finance ministries around the globe. (Says 2002 me - 2018 me replies, "well, did that happen and how successful was it?" I don't know. I do know trying to implement such plans always tangles with messy reality in unexpected ways. And that the World Bank has radically changed since then...?)

So while I kept to my little dark room, building spatial economic models, I found basic economic modelling ideas really really useful. But beyond that, in the bar brawl of macroeconomics, things get a lot messier - there really is global power, propaganda, economism to contend with.

Being simplistic, I can imagine two heterodox ways to think about that reality: revolutionaries and reformers. Where Keen might be a revolutionary, Kwak is more of a reformer (he's clear about that in this blog post). The revolutionaries won't be happy until the Great Neoclassical Tower of Barad-dur has come crashing down, having thrown the... err... Ring of Microeconomics? Into the lava of Mount Marginal?

That's not a political mapping: these revolutionaries are not necessarily more leftie. It's just that they want to throw the theoretical baby out with the ideological bathwater. I get the sense my idealistic notion of creating a clearing for transparent discussion of macro method just wouldn't work for some of those folks. (There may be some also who object to quant modelling generally - I'm saving that for another post.)

And the fact that it's wildly popular does worry me. I wonder if these attacks aren't playing the same ideological game, just as awash with shibboleths as their target. It doesn't seem like a way forward to me, if we really want to develop methods and institutions that can actually manage national economies well, or even - crazy idea I know - maintain a functioning biosphere.

Whether the actual visualisations ever happen - definitely still in the realm of fantasy but I am trying little baby steps! - there's a lot else to think about here. Stuff about realism in particular, about how different methods should be valued or discarded, seems essential to me. I still haven't really clearly explained why.

Also, more careful thought needed on how this all connects to economism. I keep on defending that one chapter by Friedman because I found it really useful at a critical moment - yet he's also a central figure in the creation of economism as an ideology, it seems. Can these two halves in my brain be reconciled?

But the fantasy idea is still appealing: arguing the case about the actual economic method in as transparent a way as possible, using visualisation, models with methods all arguable and clear via github, without diminishing the importance of the political economy. Dream on...