Aus­tralian Research Fund­ing

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Aus­tralian read­ers may have seen the crit­i­cisms I made of the Aus­tralian Research Council’s (ARC’s) fund­ing process  in Erica Cervini’s arti­cle “Show us the Money”, pub­lished in The Age and the Syd­ney Morn­ing Her­ald in the last week. The basic propo­si­tion was that the sys­tem is likely to sup­port research in an exist­ing par­a­digm, and reject explo­ration of alter­na­tives to that par­a­digm:

If Albert Ein­stein had applied for an Aus­tralian research grant, he may never have devel­oped his the­ory of rel­a­tiv­ity. Those sup­port­ing the old style of physics would have stopped him obtain­ing fund­ing, says an asso­ciate pro­fes­sor in eco­nom­ics and finance at the Uni­ver­sity of West­ern Syd­ney, Steve Keen.

”If Ein­stein needed time or money to build his the­ory, he’d never have got them under the Aus­tralian Research Coun­cil,” he says.

Keen uses the exam­ple to illus­trate how tough he says it is for peo­ple with unortho­dox views to win research grants from the coun­cil, the inde­pen­dent body respon­si­ble for man­ag­ing the national com­pet­i­tive grants pro­gram, the pre-emi­nent Aus­tralian research awards.

The ARC is sup­posed to allo­cate the government’s money wisely to sup­port research by Australia’s aca­d­e­mics, but because it uses a peer review approach to decide which pro­pos­als are worth fund­ing, it is inher­ently biased against inno­v­a­tive research. If a new researcher in a field formed the opin­ion that a cur­rently insol­u­ble prob­lem (say, the results of  “Black Body” radi­a­tion exper­i­ments) might just require a fun­da­men­tal shift in think­ing (such assum­ing that there was a fun­da­men­tal min­i­mum value for energy, rather than it being a con­tin­u­ous vari­able), it is highly unlikely that estab­lished researchers would think his idea wor­thy of fund­ing. Yet that idea might be right and the estab­lished way of think­ing wrong.

We’re rather lucky that Max Planck wasn’t rely­ing on the ARC for fund­ing, but instead got his sup­port from a com­mer­cial source (quot­ing Wikipedia, Planck “had been com­mis­sioned by elec­tric com­pa­nies to cre­ate max­i­mum light from light­bulbs with min­i­mum energy”); so ulti­mately the con­cept of quan­tum mechan­ics was born.

Per­ish the thought that the Aus­tralian gov­ern­ment might waste its research funds on such silly ideas! Instead there is an enor­mous bureacuracy–starting at the ARC itself, but more impor­tantly repli­cated through­out Aus­tralian uni­ver­si­ties as they vie for research funding–devoted to apply­ing the peer review sys­tem to make sure that this gov­ern­ment money is wisely spent.

The irony is that this “be care­ful with our money” atti­tude ends up ensur­ing that the money will rarely if ever be used to achieve fun­da­men­tal progress. If they want ARC fund­ing, aca­d­e­mics have to spend lit­er­ally months each year draft­ing pro­pos­als which are then reviewed by other aca­d­e­mics to decide which projects actu­ally get fund­ing. This is inher­ently a way of ensur­ing that only ideas that are exten­sions of cur­rently accepted thought will get funded.

The fal­lacy in this process is that it flies in the face of how sci­en­tific progress occurs–the con­cept that there are “par­a­digms” in sci­ences, that progress involves both work within a par­a­digm that advances it (“nor­mal sci­ence”), and infre­quent “par­a­digm shifts” that con­sti­tute a sci­en­tific rev­o­lu­tion, have lit­er­ally become cliches of mod­ern speech (they were first devel­oped by Thomas Kuhn, though the sci­en­tific area itself has moved on some­what). Yet the ARC’s fund­ing meth­ods are emi­nently suited to nor­mal sci­ence, and biased against sci­en­tific rev­o­lu­tions which are the events that really advance human knowl­edge.

It would be bad enough if that was all that was wrong with the sys­tem, but in true Aus­tralian style, the pro­ce­dure adds an enor­mous and expen­sive bureau­cratic over­lay to a flawed method­ol­ogy. There has been some progress in meth­ods since Geoff Davies’ excel­lent swipe at the sys­tem from two years ago in The Aus­tralian, but Geoff’s crit­i­cisms are still largely valid:

ACROSS the nation, Australia’s best and bright­est researchers, sup­ported by expen­sive teams of admin­is­tra­tors, have been devot­ing weeks of their time to such deep and eter­nal ques­tions as: Are all the pages cor­rectly num­bered, includ­ing the first page?…

We are encour­aged to join with over­seas col­lab­o­ra­tors. How­ever they must also sup­ply minu­tiae about them­selves and their insti­tu­tion, and be autho­rised at a high level of their insti­tu­tion, even if they them­selves are the respon­si­ble author­ity for research expen­di­ture. These require­ments are pre­sump­tu­ous, and insult­ing to our dis­tin­guished over­seas col­leagues.

Uni­ver­sity author­i­ties live in fear that a phrase that could be read as dis­parag­ing to the ARC might slip through, and bring the wrath of the over­lords down upon them.

So tem­pers fray, admin­is­tra­tors hire extra help and are dri­ven to dis­trac­tion, researchers are kept from their research and mon­u­men­tal amounts of time and money are wasted.

Of course, it’s under­stand­able that the public–and their polit­i­cal representatives–want a mon­i­tor­ing process to improve the odds that funds for research are allo­cated wisely. But as I argue above, the sys­tem we use actu­ally works against this, and for a sim­ple rea­son: real research involves the risk of blind alleys, yet the ARC’s mon­i­tor­ing process is designed to make it highly unlikely that any alter­na­tive alleys will be explored. Rather than risk one blind alley, the scheme sticks to the high­ways instead. It’s there­fore a means of mon­i­tor­ing the public’s research money that almost guar­an­tees that real research won’t be funded.

Sim­i­lar points are made by Pro­fes­sor Bryan Gaensler, an astronomer and ARC Fed­er­a­tion Fel­low in the School of Physics at the Uni­ver­sity of Syd­ney. Though he has done very well out of the ARC, he con­tends that the sys­tem rewards con­ven­tional thought rather than inno­va­tion:

The way sci­en­tific research is funded in Australia’s uni­ver­si­ties puts an exces­sive empha­sis on guar­an­teed results at the expense of adven­tur­ous ideas and major break­throughs…

It is often the inno­va­tor from a dif­fer­ent research field who ends up turn­ing the prob­lem com­pletely on its head, and it is some­times the obscure “blue sky” exper­i­ment that acts as the cat­a­lyst to cre­ate entire new indus­tries or solu­tions.

Unfor­tu­nately, Australia’s poten­tial for dis­cov­ery and inno­va­tion is being held back by a sys­tem that encour­ages our sci­en­tists to play it safe, to fol­low tra­di­tional paths in their research and to steer clear of avant-garde exper­i­ments that might lead to spec­tac­u­lar break­throughs.

Australia’s sys­tem doesn’t have to be this bad. Geoff Davies notes that the Cana­dian sys­tem is far more effec­tive at fund­ing research while min­imis­ing the poten­tial for waste:

In Canada, you sub­mit a brief pro­posal sum­maris­ing your research accom­plish­ments for the past three years. All pro­pos­als are read fully by the dis­ci­pline panel. If your work has been excel­lent, your fund­ing may be increased. If it has not been so good your fund­ing may be reduced, but won’t be instantly cut off. Once you are funded you are free to fol­low wher­ever your dis­cov­er­ies take you, bear­ing in mind that you will be eval­u­ated again in three years.

This sys­tem is based on work actu­ally accom­plished, rather than half-baked claims of what may be accom­plished, it read­ily accom­mo­dates the serendip­ity of research, it is far more effi­cient, it is fairer and the fund­ing out­comes are rel­a­tively pre­dictable, so careers are not so capri­ciously dis­rupted.

The ARC sys­tem is bur­dened with exces­sive detail and clumsy pro­ce­dures, it is highly inef­fi­cient, offi­cious, patro­n­is­ing and capri­cious. It is not wor­thy of the high-qual­ity sci­ence com­mu­nity it is sup­posed to serve.

These are generic crit­i­cisms of a sys­tem that largely decides who is to get fund­ing by ask­ing already estab­lished researchers to decide whether their ideas deserve support–let aone the issue of the ide­o­log­i­cal wars that are rife in social sci­ences, and the par­tic­u­lar extreme of eco­nom­ics, where one par­a­digm (neo­clas­si­cal eco­nom­ics) dom­i­nates all oth­ers. There of course I have per­sonal expe­ri­ence.

I have put in about nine appli­ca­tions over the years–starting in 1997–to get the time I needed to develop my mod­els of debt defla­tion. Each appli­ca­tion has taken some­thing close to two months to develop, given the time-con­sum­ing and capri­cious bureau­cratic over­load required by the scheme that Geoff Davies details so well–time that I could have spent doing the research, rather than apply­ing for fund­ing. Every last appli­ca­tion failed, includ­ing one where I was the top-ranked researcher at my uni­ver­sity out of the seven who made it to the final round–with an aver­age score from the four ref­er­ees of 88.75 (result­ing from 3 very high scores and one dis­mis­sively low one of 75; I was lucky that year to get 3 non-neo­clas­si­cal ref­er­ees who under­stood my work).

The ARC’s over-rid­ing com­mit­tee revised my score–to 76. Though I topped UWS on the ref­er­ees’ scores, I was the only one of the seven UWS researchers not to get funded. If there is any other expla­na­tion for this apart from bias against non-ortho­dox eco­nom­ics (or an “Old Boys Club” that is the real out­come of the super­fi­cially impar­tial eval­u­a­tion process), I’d like to hear it.

Much against my bet­ter judg­ment, I was pre­vailed upon to apply again this year–when the debt-defla­tion that I wanted to research a decade before it began was already three years old. The fund­ing results for this scheme have just been announced, and sur­prise sur­prise, I didn’t get fund­ing.

I won’t be wast­ing my time again. After all, there’s research to be done…

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • @ Alex Pol­lard

    Great, very happy to hear that. Wal and I have been in con­tact now for per­haps 20 years or so and I will be vis­it­ing him again at Xmas with my daugh­ter. Wal has opened the door to the future and it is through that door that all must pass. He and Faye are great, real peo­ple of com­pas­sion and humil­ity yet the knowl­edge and its impact, greater than any nuclear device, is enor­mous.

    You will under­stand this image then

  • al49er

    STEVE “I have a strong pol­icy on this blog of civil exchanges, and what’s hap­pen­ing between John Pren­tice and Peter Bolton right now fails that pol­icy. I will delete any fur­ther exchanges in this vein, and I’d like you both to take a break from my blog for a while. Rejoin when you have both calmed down”

    This demon­strates I have not been read­ing the detail enough of the post­ings. I looked back over 2 & 3 and couldn’t find the stoush between these two pugilists. What am I miss­ing here?

    I thought only the ‘alarmists’ and ‘scep­tics’ got in trou­ble for this sort of stuff. John & Peter will you put a bit of a ‘marker’ up on your posts when you are hav­ing a bit of a ‘biffo’.

    This site is tough read­ing at times and I find the ‘colour’
    helps. But every­one is agreed that ‘you are the boss Steve’ and I think the ‘slaps’ are taken pretty well.

    Tally Ho !

  • ak


    No there were some per­sonal and eth­nic remarks which Steve deleted. I would have done the same.

    I have to admit that I strongly dis­agree with all the “new age”-like stuff (plasma inter­ac­tions and all of that — why can’t we observe any elec­tro­mag­netic waves (includ­ing x-rays) pro­duced there?). 

    If some­body can­not com­mu­ni­cate his/her ideas in a clear man­ner using terms which can be under­stood eas­ily (with­out the hid­den con­text) and these ideas seem to be incon­sis­tent with very basic obser­va­tions — some­thing is prob­a­bly not right. 

    Not every­thing which is a “whilostic alter­na­tive” has any real sci­en­tific value. I would say that the most of this stuff is just bab­bling but some­times maybe a few inter­est­ing ideas can also be found there.

    But how does this relate to the eco­nom­ics? I would say that plasma (meta)physics has prob­a­bly very lit­tle in com­mon.

  • @ak 121

    The neolib­er­als have man­aged to poi­son peo­ple with the aus­trerity agenda mak­ing fur­ther fis­cal inter­ven­tion impos­si­ble, espe­cially if the Repub­li­cans win the elec­tions.”

    How coin­ci­den­tal that QE2 is most likely going to hap­pen just before Amer­ica faces aus­ter­ity.

    But debt delever­ag­ing will not be reversed by what­ever size of QE they under­take (even if long term inter­est rates are zero peo­ple will not start bor­row­ing again).”

    Pre­cisely. Aus­ter­ity will add extra de-lever­ag­ing forces. You know this, I know this, many oth­ers know this.

    Amer­i­cans must be brain­washed to hold up ban­ners demand­ing jobs if the only way for Amer­ica to com­pete against China is by these ways.

    1. US Trade tar­iffs for con­sumer items pro­duced at slave labor rates.
    2. Demands to China to dou­ble or triple the aver­age wage in China.
    3. Amer­i­cans to begin to work for slave labor rates.

  • @ak 128

    Not every­thing which is a “whilostic alter­na­tive” has any real sci­en­tific value.”

    Are you mean­ing holis­tic?

    I would say that the most of this stuff is just bab­bling but some­times maybe a few inter­est­ing ideas can also be found there.”

    When did the “New Age” way of see­ing things begin?

    But how does this relate to the eco­nom­ics? I would say that plasma (meta)physics has prob­a­bly very lit­tle in com­mon.”

    Really. So me reply­ing to you here doesn’t have some micro or macro affect on eco­nom­ics when eco­nom­ics hap­pens in a world that is really just vibrat­ing energy.

    Please think about that lat­est appli­ance that you have pur­chased with the made in China text on the box. Now pon­der how that appli­ance has infi­nite poten­tial before the bits of metal, plas­tic, etc that go into it to make (cre­ate) it are observed.

  • Philip

    Good news, Dean Baker’s excel­lent book Plun­der and Blun­der: The Rise and Fall of the Bub­ble Econ­omy is freely avail­able on CEPR’s web­site:

  • Vital to con­sider:
    Key­word: accel­er­a­tion | non-lin­ear | inept | “lead­er­ship” |

  • Philip

    Updated ver­sion of the NYT inter­view with James Gal­braith:

  • TruthIs­ThereIs­NoTruth

    eco­nom­ics hap­pens in a world that is really just vibrat­ing energy.”

    As fas­ci­nat­ing as it is, it is still an effec­tive the­ory. In real­ity we don’t really know what is hap­pen­ing, because in real­ity there is no absolute real­ity. We can­not get away from our human per­spec­tive. Stephen Hawk­ings lat­est book, although slightly dis­ap­point­ing, makes this point very well.

    Under­stand­ing the world as vibrat­ing energy is use­ful for mak­ing some pre­dic­tions in the top end of physics. One day this may lead to some changes in eco­nomic real­ity, but for the time being it may be a lit­tle counter pro­duc­tive to ref­er­ence all your real­i­ties on this basis. It may detract you from cor­rect inter­pre­ta­tion. If eco­nom­ics has any­thing to learn from physics it is the prin­ci­ple and accep­tance of uncer­tainty, keep­ing in mind this is at best a metaphor­i­cal con­nec­tion.

  • Gra­ham Turner

    Steve have you tried INET? it is based in the UK in Cam­bridge and backed by George Soros. Gillian Tett com­ments on its activ­i­ties in this Saturday’s FT Mag­a­zine.
    He gave $50m and estab­lished the Insti­tiute for New Eco­nomic Think­ing whose aim is to “pro­mote changes in eco­nomic the­ory and prac­tice”
    Sounds right up your street.

  • I haven’t Gra­ham, but the list of suc­cess­ful appli­cants included some peo­ple whose work I respect (such as Leanne Ussher) so I’m tempted to try myself for the next round.

  • Hi Steve, I ref­er­enced this arti­cle in a post I wrote on a pos­si­ble solu­tion on

    The Prince

  • Thanks Prince,

    It’s a good concept–though I’d like to get the ARC out of the loop as com­pletely as pos­si­ble. Aus­tralians may be social­ists at heart, but some of them are bureau­crats at heart as well. I’d like to see that side of the national char­ac­ter die a slow death.

  • Well said Steve — its the great Aus­tralian para­dox — we con­sider our­selves lar­rikins and anti-author­i­tar­ian, but we love to have rules, and com­mit­tees to design those rules and end­less dis­cus­sions (usu­ally over a beer) about those rules and etc ad nau­seam.
    Chris aka The Prince