by Ben Clift*

Political economy has long taken a keen interest in the politics of economic ideas, but considerably less attention has been paid to the politics of economic method. Method gets neglected as the technical realm within which, it is assumed economic ideas, once established, are implemented in straightforward fashion. In fact, economic method and technique are in fact key sites in the battle of economic ideas.
The rise of neo-liberalism, for example, was accompanied by a counter-revolution in economic method, animated by a focus on very particular conceptions of rational expectations. As this indicates, economic modelling assumptions are another site of contestation over economic ideas. Here we shine the light on that under-appreciated politics of economic method, in relation to expert economic policy oversight, a theme that runs through my new book on technocratic economic governance: The Office for Budget Responsibility and the Politics of Technocratic Economic Governance.

The Rise of the Technocrats
Independent fiscal councils and Central Banks have been introduced in many countries in recent decades. Technocratic economic governance, involving expert oversight of and input into often rules-based economic policy, has become pervasive in advanced democracies. Governments introduced economic policy rules, and independent oversight bodies, in an effort to reassure electorates and financial markets that they were sound custodians of the economy and the public finances.
This was, according to Public Choice theory at least, designed to take some of the politics out of economic policy-making, turning it into a mechanistic administrative process. However, this technocratic vision comes up against a central reality of political economy: economic knowledge and narratives are political and social constructs.
The operations of the Office for Budget Responsibility (OBR), the UK’s fiscal watchdog, draw our attention to the often under-appreciated politics of technocratic economic governance. Although the OBR sees itself as apolitical institution, and involved in technical work, on closer inspection – the OBR is nevertheless inextricably involved in the politics of economic policy-making.
Indeed, there is always a politics of technocratic economic governance because economic analysis and policy evaluation rest on political economic assumptions that are always contestable. Bodies like the OBR and the IMF, in their operational work, deal in contrasting normatively informed accounts of how the economy and policy work – built in via the assumptive foundations of the various models they operate with.

The Politics of Economic Method
The technocratic veneer that enshrines the work of central banks and fiscal councils occludes the politics of economic policy – deliberation and contestation over different approaches to, and understanding of, the economy and policy. A politics of economic method lens can help repoliticise analysis of expert economic governance, pointing out how economists working in these institutions have to make choices about modelling techniques and founding assumptions. In doing so, technocrats engage contrasting normatively-informed views about the economy. Altering economic model assumptions and foundations reflect different ideological pre-suppositions about, for example, how efficient markets are, or how effective economic policy can be. Appreciating the different understandings of the economy and policy at work within such apparently technical choices therefore reveals the persistent and consequential politics of economic method underlying fiscal rules regimes and technocratic fiscal governance.
The OBR – like other independent fiscal institutions – must grapple with slippery, non-observable economic concepts that are very hard to gauge. Measures of potential output, the output gap (the degree of slack available in the economy) and potential productivity are integral to economic forecasting – and the enactment of cyclically-adjusted fiscal rules. No agreed approach exists for discerning these – with practitioners acknowledging methodological choices can be somewhat arbitrary. Techniques vary, and they can reflect differing and contestable views of the economy. A statistical filters approach – one amongst many available alternatives for determining the output gap – assumes, for example, that an economy tends promptly towards equilibrium, thus yielding a distinctive growth path.
Thus economic method and technique choices matter because economic models can be powerful in shaping, for example economic policy regimes. Different pre-suppositions about things like financial markets and risk, incorporated into economic methods, can entail very different policy ramifications and corollaries for policy-makers and regulators. Within many different technocratic bodies, there are ongoing political struggles over the ideas underpinning the everyday practice of economic  governance, including the ECB. Politics of economic method debates also surround how central banks put economic ideas into practice, and how governments operationalise ideas about, for example, debts and deficits through techniques of measurement and policy instruments.
These deliberations on economic policy have played out over more variegated ideational terrain since the global financial crisis. There has been something of an ebb and flow of prevailing views on ‘sound’ economic policy, exemplified in debates about the politics of austerity. The politics of economic method played a central role. The influence of the austerian Boccioni boys owed a lot to the favour their methods found in academic economics. Economic policy debates about austerity vs stimulus played out amongst leading economists through their modelling assumptions.
The IMF altered the assumptions feeding into its fiscal modelling, abandoning New Classical or ‘Ricardian’ thinking to rediscover some older (Keynesian) assumptions about how the macro economy works. Fresh insights that revise and alter economic orthodoxies are arrived at and substantiated using particular analytical techniques in ways that engage the politics of economic method.

The politics of economic method can also influence how effective global governance is. The economistic parameters within which the IMF broaches the issue of inequality is another example of the salience of the politics of economic method. Mainstream neo-classical inspired economics lacks the methodological tools to address inequality. Drawing on these foundations limits IMF efficacy. The mind-set that IMF models reflect limits its capacity for tackling inequality.

Technocratic Economic Governance and the Politics of Growth
The politics of economic method lens underlines how technocratic fiscal oversight is a deeply political process. The OBR see themselves as a non-normative body, dispassionately apply the settled wisdom of the economics profession in scientific fashion. But economic analysis, evaluation and oversight inevitably engages competing constructions of economic reason, drawn from different theoretical homes. These assumptive foundations underpin how market economies are understood, and through that inform expert economic assessment of the economy.
If we take the example of technocratic economic governance institutions gauging economic growth, their growth assessments rest upon particular political economic assumptions. In the background of these are theories about markets and growth, built from distinct understandings of the economy. Choosing amongst these different concepts and interpretations thus engages the politics of economic method.
For example, following the global financial crisis many observers – including the OBR – initially anticipated a swift ‘bounce back’ to prior UK trends of economic growth. This was based on partly on historical precedent – after all, these patterns had remained relatively stable and consistent over many decades. Yet it was also based on what turned out to be flawed assumptions about the inherent efficiency of free markets, and the British model of capitalism.  However, over time it became clear that the British economy’s self-correcting properties were not as powerful as the OBR has previously assumed.
Although establishing a growth trajectory is an apparently technical point, the OBR judgements about are hugely consequential for economic policy, profoundly shaping policy ‘space’. A lower growth path has a material impact on public debt and deficits through the lower tax takes it envisages. These projections therefore can reduce policy space and make fiscal rules harder to meet. The is but one indication of just how important the the politics of economic method can be.
OBR difficulties in accurately discerning the post-crash growth trends of the British economy are instructive. Economic forecasting always involves method and technique choices – and hence the politics of economic method. Forecasting also entails judgement, and in the background are assumptions about the characteristics of markets and the appropriate role of the state, which have been debated for centuries.
The OBR’s forecasting, analysis, commentary and fiscal oversight, therefore, is not a narrowly technical pursuit. The technocratic veneer that enshrines the work of the OBR obscures a key aspect of the politics of technocratic economic governance – namely the politics of the economic ideas involved in putting independent fiscal oversight into practice.
The technocratic presumption that experts administer and apply a settled truth in their work is at odds with the reality of a spectrum of different economic ideas, concepts and theories. Dissonance between different understandings of economic policy often comes into sharper focus through periods of crisis and heightened uncertainty – which have been frequent and protracted within British capitalism in the early 21^st Century.

Conclusion
We can take research on the politics of economic ideas forward by highlighting the importance of economic method, and modelling assumptions, as sites of contestation within economic governance and economic policy-making. Economic concepts used to gauge growth trajectories and frame and pilot economic policy, even when operationalised and deployed by technocratic bodies like the OBR or IMF, are always founded upon contestable normative assumptions.
Since the global financial crisis, we increasingly lack a single agreed fiscal policy script or settled expert view. Rather, understandings on fiscal policy efficacy, the properties of markets, and the impacts of macroeconomic policy on long-term growth differ. There is a spectrum of respectable opinion – drawn from different economic theoretical homes. This makes deliberation and contestation over economic methods and modelling assumptions even more significant, and consequential for policy.
A politics of economic method lens helps appreciate how apparently technocratic economic governance, carried out by bodies like the OBR and the IMF, is saturated with the politics of economic ideas.

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* Ben Clift is Professor of Political Economy in the Department of Politics and International Studies at the University of Warwick. Among his previous books are Comparative Political Economy: States, Markets and Global Capitalism (2021), The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis (2018), and French Socialism in a Global Era:  The Political Economy of the New Social Democracy in France (2005).

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