Review: Demand Side Economics (podcast)
One positive effect of the 2008 financial collapse is that it has energized popular scrutiny of mainstream economic theory. The average person remains in the dark about credit default swaps and derivatives trading, but they are increasingly aware that economic theory is not the unified science its practitioners often pass it off as. The evidence is unavoidable: inequality and unemployment are at critical levels, de-regulated free-market "equilibrium" feels like an economic hurricane at the human level, governmental financial predictions are less reliable than guesses, and TV economists now only wear ties that colour-coordinate with "crimson-faced embarrassment". In times like these, dissenting voices need to deliver alternative economic visions in an accessible vernacular: the Demand Side Economics podcast is such a voice.
"Demand side" refers to a school of economic thought inspired by John Maynard Keynes that opposes many of the assumptions of mainstream "neoclassical" economics. In very basic terms, neoclassical models favour free-market forces (deregulation, low taxation) as the natural determinants of healthy economies, whereas demand side models favour central interventions (infrastructure spending and taxation) to mitigate boom-and-bust instability. The "demand" aspect refers to the prioritization of people's ability to participate in the economy (i.e. work and spend) over the freedom of capitalists to maximize profits at any social cost.
Host Alan Harvey delivers the demand side perspective in episodes that generally follow one of three formats. (1) Demand-side interpretations of current economic data; Harvey's current analytic mantra - "Bouncing along the bottom with downside risks" - reflects his deep pessimism toward a political culture in denial that persists with bankrupt economic thought (see "Forecast Friday" episodes). (2) Critique of what Harvey views as the hopelessly misguided (and, as he often intimates, intentionally misleading) analyses of mainstream economists and pundits - "Idiot of the Week" sections smack less of ad hominem spite than a genuine frustration at the partisan role played by supposedly objective, scientific analysts. (3) Finally, "Demand Side Relays" deliver edited speeches and broadcasts from like-minded economists (including Steve Keen and Joseph Stiglitz), with minimal commentary from Harvey.
Quite clearly Demand Side delivers a particular view, and if the last five years has taught us anything it is that we should be suspicious of any economic philosophy that claims to be "a system that works." But Harvey's podcast also does a great non-partisan service in identifying the questionable role of academics in propagating economic ideology. Take the case of Harvard economists Reinhart and Rogoff, whose 2010 paper - which concludes that economic growth stalls in countries when their debt-GDP ratio reaches 90% - became a key source of legitimacy for widespread international policies of austerity. Reinhart and Rogoff's paper has since been discredited as biased, of questionable methodology, and riddled with errors including a basic excel spreadsheet anomaly(!) This revelation came three years too late to offer any comfort to the people of Greece, the UK, and a number of other populations who are needlessly enduring brutal austerity policies. How did such an influential publication make it through the peer-review process? What other bogus studies are currently propping up public policy? Who exactly is funding and influencing the findings of presumably neutral scientists? Merely laying claim to scientific basis has proven to be no guarantee of accuracy or political objectivity in the past: we should remember that eugenics, craniometry and polygenism were all post-hoc scientific attempts to legitimize manifest racist inequality as expressions of the natural order of things. Could economic theory not be used to serve similarly nefarious interests?
Demand Side Economics is not out to entertain: it expends little energy on production values and Alan Harvey's delivery is drier than a Churchill martini. Having never found a reliably genuine image of Harvey online, I always imagine his dour monologues delivered by Droopy the dog, and I suspect that the excellent transcripts he provides with each episode are really repurposed scripts. But there is a charm to the deadpan, and Harvey's glum sense of humour delivers the occasional wry smile. As an economics neophyte, I appreciate the clarity and scope of these podcasts, and I feel just that little bit better equipped to withstand the barrage of economic crypto-science masquerading as objective information.