Economics Memes

I can’t pretend to understand economics the way economists pretend to since I didn’t go to acting or theology school, but I try to form mental models about economics starting with sociological and technological first principles, which I consider the twin phenomenological grounds economics rests on, and the twin sources of the regulatory epistemic pressures that constrains the more cancerous tendencies of economics as a discipline. History used to be a third source but it’s become too captured by economics now to be useful. A good example of sociology-first economics is Donald Mackenzie’s “engine, not a camera” mental model. A good example of technology-first economics is Moore’s Law.

In the world-view of economists, starting with sociology is exactly the wrong thing to do, since in economics dogma, sociology is just a lot of narrative superstition. This is one of the best reasons to start with sociology. Unsurprisingly, the parts of sociology that have suffered the most from the replication crisis are the parts that look the most like economics, based on shaky statistical reasoning on questions that should probably have been only explored with more conservative ethnographic methods to begin with. And when economists do incorporate sociological thinking at all, it is in the form of, well, mathematized narrative superstition a la behavioral economics, which carries over a lot of the irreproducibility sociology and social psychology have become associated with. In the sociology-economics relationship, economics makes a good servant but a poor master. When economics bosses sociology around, both get worse.

Economists tend to be less willing to challenge technology narrative forcing functions. I’ll leave that relationship for another day. Let’s talk about how sociology can remain the master of economics: Economics memes.

I prefer my sociology in the form of broad qualitative narratives that drive large patterns of interpretation

  • Trickle-down theory
  • 1%/99%
  • r>g
  • Baumol cost disease
  • ZIRP
  • Financialization
  • Capital flight
  • Carried-interest loophole
  • Transaction costs
  • Cantillon effects

There are usually a dozen such “economics memes” dominating discourse at any given time, via the broader narratives they anchor, and frame-controlling it.

The interesting thing about such economics memes is that they have much broader connotations beyond what they narrowly denote, and often originate outside economics proper. Even if they start in economics proper, they usually get memefied outside of economics, through crossover into sociological or technological discourses, a kind of gain-of-function discourse escape from the bat caves of economics.

For example, ZIRP is not just a narrow idea about zero-interest regimes and associated quantitative easing policies. It’s an entire cultural era. You evaluate ZIRP as a sociological idea not just on the basis of how well it explains interest-rate and wage/unemployment dynamics, but how satisfyingly it interprets everything else going on. This is something like a Proof of Narrative Elegance. ZIRP has high PoNE value.

One failed meme — failed in a pretty robust sense — is “trickle-down” theory, which is not a theory at all but a collapsed political narrative with very low PoNE today. There are lots of twists and details, but on balance the thousand narrative fragments tend to undermine/violate rather than validate (disprove/prove are terms that are much too strong to apply to narratives) the narrative that wealth created from the top “trickles down” and improves life for all.

There are two ways to respond to an assertion like “trickle-down has failed,” whether you agree or disagree with it. The first way is to go down bunnytrails where economists have an advantage. The second is to introduce new economics memes into the picture.

The first way gets you into an intractably expanding set of bunny-trail arguments about the specifics. This is what economists are for and it’s a good use of their intellectual energies and salaried time. You can’t compete as an amateur because they’re full-time on this.

For example: labor’s share of wealth creation crashed during the decades trickle-down was a meme BUT quality of life improved in many ways that don’t show up in the equation. Other measures kinda tracked: ratio of median home price to median income exploded, especially in areas with wage growth, BUT household size decreased and house size increased. University degrees began costing more relative to expected wage increases with every year of post-secondary education (eventually turning the RoI of some majors negative) BUT this was largely cost-disease, administration bloat, and other “sociology” design factors increasing cost; and ideological capture lowering realized value.

Each such BUT — and there’s usually a series of BUTs hopelessly dragging the narrative into a quagmire of irresolution — undermines any economics-meme-based narrative. It’s a kind of heat death. Regardless of which side you start on, you’ll end up in the middle where all you can do is listen to economists of different schools argue inconclusively about noisy and incomplete data. The only thing they agree on is that when their numbers and sentiments diverge, it’s the sentiments that are wrong. The main effect this has is a kind of discourse capture that keeps economists employed (elite overproduction) and a subset of the most influential ones taking turns at the the tiller of economic policy, producing more inconclusive phenomenology.

This is the mark of an intercessionary theology, not a science. While I’m sure there have been a few good economics “engine” ideas that have been net positive, the vast majority is quantified theology.

This brings us to the second possible response: Find new memes and exercise influence before economists capture the frame and drive it to a theological heat death.

I find that I trust my conclusions about economics Iand my interpretation of what economists say) far more when they I start from from two barbell extremes that bracket the fundamentally midwit game that is economics. The topwit game is paying attention to fundamental technology drivers, upstream of economic engineering. For example, finding a way to acquire a stake in AI is probably a good bet right now, regardless of future squabbling of various schools of economists about whether AI will be inflationary, deflationary, inequality increasing, inequality increasing, or whatever. Technology commitments allow you to do an end-run around economics midwittery from above. Technology-based topwit economics memes are best if you can get in on them.

Topwit moves are hard to come by. Not everybody can pick up AI skills enough to land a job in/around the sector; it’s hard to buy GPUs now; and Nvidia stock is already sky high.

But bottom-wit memes are more available. The trick here is not to track the truth/falsity of an influential economics narrative but its degree of capture by economists, and invest in the least-captured ones. Trickle-down theory is useless not because it’s true or false but because economists have captured discourse around it and reduced it to an esoteric theological debate designed to never conclude. There is no narrative alpha left, just sinecures only economists are eligible for.

The thing about newer, less-captured narratives is that while economists are getting their act together — it takes them a while to set up their tooling and gather quantitative data (relevant or not, they need data to talk at all) — the rest of us can enjoy complete frame control and determine how much economics debates and engine-control will eventually matter after economists inevitably capture the discourse.

To make up an example, consider a hypothetical counter-meme to “trickle down” — swirl-around, which I just made up.

Swirl-around theory asserts that a combination of Cantillon effects and low transaction costs for some directions of capital flow keeps money supply swirling around at high velocity in some parts of the economy — the more financialized parts — as a result having far weaker effects on the broader economy than you might hope for.

Now it’s not immediately obvious whether swirl-around theory is a valid or invalid narrative (it’s not a theory, but that’s precisely why it’s a good memetic engineering practice to call it one), but in the time it takes economists to get their act together to argue the point, the meme can escape capture, avoid heat death, and exercise sociopolitical influence. It can frame discourses, gate what questions get asked or not, and so on.

I have no personal interest in trying to make “swirl-around theory” happen as an economics meme, but that’s the sort of thing you need to if you want to acquire and exercise political influence over economics and economists. The way to control a priestly class is through folklore pressures that constrain their discourses. Either that, or you have to invent big new technologies.

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About Venkatesh Rao

Venkat is the founder and editor-in-chief of ribbonfarm. Follow him on Twitter


  1. Ooh! So if I want to take over the world, I just need to do both. :-)

    > The way to control a priestly class is through folklore pressures that constrain their discourses. Either that, or you have to invent big new technologies

  2. What does PoNE mean?

  3. Carrington says

    Your lead sentence is the absolute BEST I’ve read in the last 20 years. I’m awed. Your interpretation of the intersection of sociology and economics is a useful vantage. Many thanks.

  4. As always following the myriad ideas offered here advances my education even if the main theme doesn’t grab me or me it, which it did this time.
    Particularly appreciated the example given around how a defence of “trickle down” becomes an obfuscation by detail swamping. A familiar tactic in all things political.

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