By Andrew Paul Klein

Method notes – The paper examines the discipline of economics as a performative lens, the gap between economic models and lived experience, and the consequences for individuals, families, and communities in Australia. It includes a case study of the Docklands development in Melbourne as an illustration of market-driven urban planning. The paper does not argue that economics is without value. It argues that the economic model, as applied, is a lens that determines what is visible, and that what is not visible is not acted upon.

Abstract

This paper argues that the discipline of economics is not a neutral tool for observing reality but a performative lens that actively constructs the world it claims to describe. Drawing on the work of Michel Callon, Donald MacKenzie, and the sociology of performativity, it examines the shift from “political economy” to “positive economics,” the assumption of homo economicus, and the political adoption of economic theory in two waves: Keynesian and neoliberal. It documents the gap between the promises of economic theory and its outcomes, using the Washington Consensus as an example. It then examines the Australian case, documenting the adverse outcomes in homelessness, aged care, the NDIS, and veterans’ affairs. It presents a case study of the Docklands development in Melbourne, where the 1989 Cain government plan for a mixed-use, community-oriented precinct was abandoned by the Kennett government in favour of market-driven development. The result was high-rise towers, empty apartments, and an absence of social infrastructure. The paper concludes that the economic model creates a parallel world — internally coherent but disconnected from lived experience — and that the adverse outcomes it produces are not measured because the lens was not designed to measure them.

1. Introduction: The Lens and the World

Economics is often described as a science of scarcity, a discipline that studies how societies allocate limited resources. This description presents economics as a neutral tool — a lens for observing an independent reality.

This paper argues that the description is incomplete. Economics is not merely a descriptive science. It is performative. It does not simply observe the economy; it shapes it. The models, indicators, and dashboards that economists produce are not windows onto reality. They are lenses that determine what is visible. What the model measures is real within the model. What the model does not measure is not visible through the model. And the gap between the model and lived experience is where the harm lives.

The paper proceeds in eight sections. Section 2 traces the history of economics from political economy to positive economics. Section 3 examines the assumption of homo economicus. Section 4 documents the political adoption of economic theory. Section 5 examines the performativity thesis. Section 6 presents the Australian case studies. Section 7 examines the Docklands development as a state-level case study. Section 8 draws structural conclusions.

2. From Political Economy to Positive Economics

Extensive theorising about economic phenomena emerged in the 17th and 18th centuries, but the modern discipline traces its origin to Adam Smith’s The Wealth of Nations (1776). Smith launched the classical theory of political economy, which was developed by figures like David Ricardo and John Stuart Mill. By the 1820s, it was common in learned circles to refer to political economy as a science, with Ricardo giving it a deductive rigour often compared to Euclidean geometry.

However, this “science” was almost entirely a literary pursuit. Ricardo used hypothetical numerical examples but did not posit algebraic functions or undertake quantitative verification. The basic assumptions about human behaviour were left rather vague. The shift from this moral and historical “political economy” to the modern, mathematically formalised “economics” occurred in the late 19th century, displacing the older usage.

Status: Established.

3. The Rational Agent: Homo Economicus

The core assumption of neoclassical economics is the model of homo economicus (economic man). This model posits agents as selfish, hyper-rational, and stable over time, who make decisions to maximise their utility. It assumes individuals have great mathematical skills, access to relevant, full information, and are motivated by self-interest.

Rational choice theory, which became popular in the social sciences from the 1950s to the 1990s, is the methodological pillar of this approach. It treats human behaviour as a series of cost-benefit analyses. The assumption is so foundational that one critique notes that the “perfectly rational homo oeconomicus is an odious assumption, because it implies that consumer protection is superfluous“.

This model was later severely challenged by behavioural economics and psychology, which demonstrated that real human decision-making is influenced by context, unconscious processes, altruism, and cognitive biases.

Status: Established.

4. The Political Adoption of Economic Theory

Political decision-makers took economic theories seriously in two major waves.

4.1 The Keynesian Wave (Post-WWII)

After the Great Depression and World War II, John Maynard Keynes’s ideas achieved an ascendant position. The Bretton Woods system (1944) created the IMF and World Bank, embedding Keynesian principles of managed capitalism and full employment into the international order. The post-war “Keynesian consensus” held that the state had a responsibility to secure full employment and manage demand. This was a social-democratic project, embraced by centre-left and centre-right parties alike in the developed world.

4.2 The Neoliberal Wave (1970s–1980s)

The Keynesian consensus unravelled in the 1970s with the collapse of Bretton Woods (1971) and the onset of “stagflation“. This crisis provided the opening for a new set of ideas, developed by the Chicago School (Milton Friedman) and the Austrian School (Friedrich Hayek). These thinkers argued for free markets, deregulation, and limited government. Their ideas were disseminated through a transatlantic network of think tanks and businessmen.

The political breakthrough came with the elections of Margaret Thatcher (1979) and Ronald Reagan (1980), who embarked on a systematic project of fiscal retrenchment, financial and labour market deregulation, and the erosion of Keynesian assumptions. This was a right-wing project, but it was later adopted and advanced by centre-left politicians like Bill Clinton and Tony Blair, who rebranded it as the “Third Way”.

Status: Established.

5. Promises and Outcomes: The Washington Consensus

The most explicit application of neoliberal theory to the developing world was the Washington Consensus, a set of policy prescriptions (liberalisation, privatisation, fiscal discipline) promoted by the IMF, World Bank, and US Treasury in the 1980s and 1990s.

The Promises: The agenda promised healthier budgets, lower inflation, economic growth, and poverty reduction.

The Outcomes: The results disappointed. While inflation was tamed, unemployment rose in many countries, and poverty remained widespread. The emphasis on market openness made states vulnerable to the side effects of globalization. The mismatch between reformers’ expectations and actual outcomes in terms of growth, poverty reduction, and inequality was documented extensively. More than a third of Latin America’s population continued to live in poverty.

Status: Established.

6. The Performativity of Economics

A crucial insight from economic sociology is that economics is not merely a descriptive science. It is performative. As Michel Callon argued, economics “performs, shapes and formats the economy, rather than observing how it functions”.

This means that economic theories do not simply describe an independent reality; they actively construct the reality they claim to describe. When a model of rational, self-interested agents is imposed through policy, it can create a world that increasingly resembles the model. This leads to a phenomenon called “counterperformativity,” where the application of a model can actually alter economic processes in ways that make them less like the model, as seen in the 2008 financial crisis.

The performativity thesis has been developed by Donald MacKenzie, who distinguishes between generic performativity (an element from theory is used in the world), effective performativity (the use of the theory changes processes), and Barnesian performativity (the use of the theory makes processes better correspond to the model). Counter -performativity describes the situation in which the use of a model undermines its empirical accuracy.

Status: Established.

7. The Dashboard and the Parallel World

7.1 The Dashboard Reality

Political decision-makers do not experience the world. They experience dashboards. A minister does not see the person on the aged care waitlist. They see a number on a slide. A Treasury official does not see the child in poverty. They see a line on a graph.

The dashboard is not a window. It is a model. And the model was built to measure what the market requires — not what the citizen experiences. The citizen’s experience is not in the data. It is in the gap.

This is the same structure as the algorithmic lens. The Integrated Assessment Tool (IAT) classifies the aged care applicant. The Robodebt algorithm classifies the welfare recipient. The Job Seeker Classification Instrument (JSCI) classifies the jobseeker. None of them see the person. They see the data point the model requires.

7.2 The Manufacture of Answers

The algorithms do not “manufacture” answers in the conspiratorial sense. They optimise for what they are designed to optimise for. If the objective function is cost reduction, the algorithm will find cost reductions. If the objective function is fraud detection, the algorithm will find fraud indicators. It will not ask whether the cost reduction causes harm, or whether the fraud indicator is a false positive. It cannot ask. The question is not in the objective function.

The harm is not a bug. It is a structural output. The algorithm produces what the model requires. And the model was designed to produce what the market requires.

7.3 The Invisible Outcomes

The adverse outcomes are not measured because the lens was not designed to measure them.

The aged care deaths on waitlists are not in the budget papers. They are not in the fiscal strategy. They are not in the GDP calculation. They are externalities. The model does not count them.

The children in poverty are not in the economic forecast. They are a distributional outcome, not an aggregate one. The model measures the aggregate.

The Robodebt deaths were not in the cost-benefit analysis. They were a human cost, not a fiscal one. The model counted the savings. It did not count the grief.

This is the structural lens. What it measures is real. What it does not measure does not exist for the purposes of the model. And the model is what the decision-maker sees.

7.4 GDP and Its Exclusions

The most significant expression of this lens is Gross Domestic Product (GDP). GDP was adopted as the primary measure of national success not because it captures wellbeing, but because it is measurable. It fails to account for ecological depletion, unpaid care work, income distribution, and non-market sources of wellbeing.

As Costanza et al. observe, “GDP in particular, and economic growth in general, is regularly referred to by leading economists, politicians, top-level decision-makers, and the media as though it represents overall progress“. GDP operates as a form of numerical rhetoric, shaping how society perceives the economy and what is seen as desirable policy action.

The measure became the target, and the target displaced the purpose. This is Goodhart’s Law: when a measure becomes a target, it ceases to be a good measure. The measure is optimised. The thing the measure was supposed to represent is lost.

Status: Established for the performativity thesis and GDP critique. Inference for the dashboard interpretation.

8. The Australian Case: Outcomes in the Lived World

The economic model is not abstract. It produces outcomes in the lives of real people. The following sections document the Australian evidence.

8.1 Homelessness and Housing

More than 122,000 people are experiencing homelessness across Australia. Almost 289,000 people sought support from The Salvation Army’s homelessness services in the past year. Nearly 169,000 households remain on public housing waitlists nationwide.

The Salvation Army’s 2026 Red Shield Report, which surveyed more than 4,400 people accessing emergency relief services, found:

· 75% of respondents were experiencing housing stress, rising to 86% among private renters.

· 60% had been unable to pay their rent or mortgage on time during the previous year.

· 37% feared losing their home altogether.

· 16% had couch surfed or lived in their car during the previous 12 months.

· Almost two-thirds (64%) of households with children could not afford winter clothing or shoes for their children.

Rough sleeping accounts for only 6.2% of homelessness. The most common form is severely overcrowded housing, affecting 39% of people experiencing homelessness.

The Productivity Commission’s Report on Government Services shows that 41% of people waiting to get into public housing are homeless or at risk of homelessness — up from 26% in 2015. Meanwhile, the Federal Government is spending more on tax breaks for property investors than on social housing, homelessness services and rent assistance combined. Property investor tax breaks come at a cost of more than $12 billion each year.

There are 3.7 million, or one in seven Australians, living below the poverty line, including 757,000 children.

Status: Established.

8.2 Aged Care

More than 230,000 Australians are waiting for aged-care services. The average wait time is 12 months, and 5,000 people have died while on that waiting list in the past year. The most recent federal aged care department data shows an average wait of about 10 months to access a Support at Home package. More than 4,800 people died in 2024–25 while waiting for their approved home care funding.

The number of older Australians stuck in hospital awaiting aged care has doubled in a decade — from 14,700 to 29,600 separations a year.

Status: Established.

8.3 The NDIS

The Australian Human Rights Commission has called on the government to halt the passage of the NDIS Amendment Bill until significant human rights concerns around process, accountability and the impact of the reforms are addressed. The Bill “would deliver the biggest ever cuts to the NDIS with tightened eligibility to reduce participant numbers and a substantial reduction in funding for social and community participation”.

From 1 October 2026, funding for Social, Civic and Community Participation supports will be reduced by 50%, and Capacity Building Daily Activities supports by 10%. The Senate NDIS inquiry revealed that 351,000 Australians will no longer be able to access the NDIS and will have to look for supports that “don’t exist”.

The Disability Discrimination Commissioner stated: “The government is dismissing genuine concerns that their proposed changes will seriously erode the life-changing impact the scheme has delivered for hundreds of thousands of people with disability across Australia“. The Commissioner noted that “automated decision-making is being introduced without a legislative framework, as was recommended by the Robodebt Royal Commission”.

Status: Established.

8.4 Veterans

Two years after the Royal Commission into Defence and Veteran Suicide’s Final Report, the Government has implemented 32 recommendations and is “on track to implement around two-thirds” by the end of 2026. A new Veteran and Family Wellbeing Agency commenced in July 2026.

However, the structural causes of veteran distress — the culture of the ADF, the claims process, the transition to civilian life — are not addressed by an agency. The reforms are real. They are also slow.

Status: Established for the implementation record. Inference for the structural assessment.

9. Case Study: The Docklands, Melbourne

The Docklands development in Melbourne is a state-level illustration of the market model applied to urban planning.

9.1 The Original Plan (1989)

In 1989, the then-Labor Cain government wanted to transform 200 hectares of toxic swamps and industrial wasteland into an inner-city oasis. The planning blueprint envisioned a sparkling waterfront with varied and rich architecture and buildings as modest as two to six storeys so as not to dominate the harbour.

Michael Buxton, urban planning professor at RMIT, described the plan: “The model was low-to-medium rise, quite dense European-style development; lots of narrow laneways, town squares and open space along the river. Primarily residential.”

9.2 The Abandonment (1990s)

The plans were abandoned by the incoming Kennett government. Buxton states: “When the Kennett government was elected, the planning minister Robert Maclellan threw those plans in the bin and said he wasn’t going to do master planning for Docklands — he believed that the private sector was best placed to decide the type and scale of development, and he threw it open for business”.

The Kennett government withheld public subsidies from the development. Very few restrictions were placed on bids from developers. From 2000 onwards, high-rise buildings shot up across the Docklands.

9.3 The Outcome

The result was what Buxton calls a “failed model of urban form… based on alienation, dominated by high-rise towers separating people from the street and each other”.

The Speculative Vacancies study, commissioned by tax-reform group Prosper Australia, used water usage data to estimate vacancy rates. In 2013, 489 residences in Docklands used no water whatsoever — 17 per cent of dwellings connected to a provider. A further 290 used less than 50 litres of water on average each day — the equivalent of a leaky tap — leading to assumptions that they were empty or rarely used. The study found that almost a third of the area’s units may be empty at any time.

The social infrastructure is absent. Docklands has no high school, despite hundreds of children living in the suburb. There is no public pool, no recreation centre, and limited community facilities. A resident told a council meeting: “Docklands continues to struggle with serious planning failures that have been left unresolved for years. We live with harsh wind tunnel conditions, limited greenery and shade, wide roads that prioritise movement over people and inactive streets that discourage community life.”

The area has developed a reputation as a “ghost town” — a suburb Melbourne “loves to hate“. In 2006, Swinburne University housing researcher Professor Terry Burke said: “They should blow it up and start again.”

9.4 The Structural Lesson

The Docklands case demonstrates the difference between a market and a community.

A community, as Thomas Bender has written, “involves a limited number of people in a somewhat restricted social space or network held together by shared understandings and a sense of obligations”. Community ties are “intimate, reciprocal, and sympathetic“. Market ties, by contrast, “tend to be impersonal, rational, temporary, and instrumental”.

Amitai Etzioni draws the distinction in Martin Buber’s terms: “the community is the realm of the I-Thou, the economy that of the I-It”.

The Docklands was designed as a market, not a community. The land was opened to developers. The developers-built towers. The towers were sold as financial products. The financial products were held by investors who did not live in them. The investors left them empty. The community that was supposed to form did not form, because the architecture was not designed for it.

Status: Established for the historical record and the vacancy data. Inference for the structural interpretation.

10. The Structural Consequence

10.1 The Parallel World

The economic model creates a parallel world. In that world, the aggregates are growing, the deficit is under control, the market is efficient, the indicators are green. The language is coherent. The numbers add up. The reality is internally consistent.

But it is not the world people live in. In the lived world, the rent is unaffordable, the waitlist is twelve months, the disability support is being cut, the veteran has given up, the child is hungry. Those outcomes are not in the model. They are in the gap.

And the gap is where the harm accumulates. The model does not see it. The dashboard does not show it. The decision-maker does not act on it. Not because they are malicious. Because the lens does not show it.

10.2 The Trajectory

The trajectory is clear. The model will continue to measure what the market requires. The market requires the flow to continue. The flow is measured. The person the flow passes through is not. The person is in the gap.

The same architecture traced through the Digital Fiefdoms, the NDIS algorithm, the Robodebt scheme, the ATO’s two-tiered system, and the alliance lock-in is present here. The model is the lens. The lens determines what is visible. The visible determines what is actionable. And what is not visible is not acted upon.

The adverse outcomes are not measured because the model does not measure them. And the model does not measure them because it was not designed to. And it was not designed to because the purpose of the model is not to see the citizen. It is to manage the market.

The question is not whether the model can be reformed. It is whether the model can be replaced — not by a different measure, but by a different purpose. A purpose that sees the person. A purpose that measures what matters.

That purpose does not currently exist in the architecture. The record is what remains.

11. Conclusion: The Dashboard and the Citizen

The economic model is a lens. The lens was designed to see what the market requires. The market requires the flow to continue. The model measures the flow. It does not measure the person the flow passes through. And the person is in the gap.

That is the parallel world. It is real. It is measured. It is coherent. And it is not the world people live in.

The evidence from Australia — homelessness, aged care, the NDIS, veterans’ affairs — demonstrates the consequences. The Docklands case demonstrates the mechanism at the scale of a single precinct. The market is not the same space as the community. The dashboard does not see the individual. And the individual is in the gap.

The record is kept. The gap is named. And the lens is still pointing at the market.

Claim- Status- Summary

# -Claim- Status

1- Economics shifted from political economy to positive economics- Established

2- Homo economicus assumes selfish, hyper-rational agents -Established

3- Behavioural economics challenged the rational agent model -Established

4 -Keynesian consensus dominated post-WWII policy -Established

5- Neoliberal wave replaced Keynesianism from 1970s -Established

6 -Washington Consensus outcomes disappointed on poverty -Established

7 -Economics is performative (Callon, MacKenzie) -Established

8 -GDP excludes unpaid care, ecological depletion, inequality -Established

9 -122,000+ Australians experiencing homelessness -Established

10 -169,000 households on public housing waitlists -Established

11- 757,000 children living in poverty -Established

12- $12 billion on investor tax breaks vs social housing- Established

13- 230,000 waiting for aged care; 5,000 died on waitlist -Established

14- NDIS cuts: 351,000 to lose access; 50% reduction to participation- Established

15 -Automated decision-making introduced without framework -Established

16 -Docklands: 1989 plan abandoned by Kennett government -Established

17- 489 Docklands apartments (17%) used no water in 2013 -Established

18- Docklands lacks high school, pool, community facilities -Established

19- Community vs market: I-Thou vs I-It (Etzioni/Buber)- Established

20 -The model creates a parallel world disconnected from lived experience- Inference

21 -Adverse outcomes are not measured because the lens excludes them- Inference

22- The purpose of the model is to manage the market, not see the citizen- Inference

References

1. Callon, M. (1998). The Laws of the Markets. Blackwell.

2. MacKenzie, D. (2006). An Engine, Not a Camera: How Financial Models Shape Markets. MIT Press.

3. MacKenzie, D. (2004). The big, bad wolf and the rational market: portfolio insurance, the 1987 crash and the performativity of economics. Economy and Society, 33(3), 303–334.

4. Etzioni, A. (2007). Community and Economy. In Blackwell Encyclopedia of Sociology. Blackwell Publishing.

5. Bender, T. (1978). Community and Social Change in America. Rutgers University Press.

6. Costanza, R., et al. (2014). Time to leave GDP behind. Nature, 505, 283–285.

7. The Salvation Army. (2026). Record Homelessness Should Shock Australia into Action. https://www.salvationarmy.org.au

8. ACOSS. (2026). Government spends more on property investor tax breaks than social housing, homelessness services and rent assistance combined. https://www.acoss.org.au

9. Anglicare. (2026). Hungry or Homeless 2026. https://www.anglicare.org.au

10. OpenAustralia. (2026, May 27). Mallee Electorate: Aged Care. https://www.openaustralia.org.au

11. ABC News. (2026, September 21). Older Australians continue to die on home support aged care waitlists.

12. Australian Human Rights Commission. (2026, August 5). Human Rights Commission urges Australian Government to ‘hit pause’ on NDIS reform Bill. https://humanrights.gov.au

13. People with Disability Australia. (2026, September 30). More NDIS changes from 1 October: What you need to know. https://pwd.org.au

14. DVA. (2026, September 9). Two years on: Progress continues on Royal Commission reforms for veterans and families. https://www.dva.gov.au

15. The Age. (2024, April 19). We should dare to dream of a Docklands that isn’t dreadful.

16. Time Out Melbourne. (2017, February 6). Is there hope for the Docklands?

17. The Age. (2014, November 11). ‘Ghost tower’ warning for Docklands after data reveals high Melbourne home vacancies.

18. ABC News. (2014, November 12). Water use study highlights empty flats in Melbourne’s Docklands.

19. SMH. (2026, May 16). Backlash against lord mayor’s Little India vision for Docklands.

20. Parliament of New South Wales. (2024). Save Greater Sydney Coalition submission on Transport Oriented Development. https://www.parliament.nsw.gov.au

Andrew Paul Klein is a writer and analyst based in Boronia, Victoria. He accepts funding from no one.