I have referred to top-down thinking in a post on this blog today, and that does, I think, require me to explain what I mean by this term, and what I therefore mean by the alternative description, which is, unsurprisingly, bottom-up thinking. I have, therefore, added these definitions to this blog's glossary to explain these terms:
Top-down thinking is a mode of reasoning that begins with a prior proposition, theory or belief and then seeks evidence to confirm it. The framework comes first; observation follows. Evidence that fits the proposition is emphasised, while evidence that challenges it is often discounted, reinterpreted or ignored.
Top-down thinking is common in economics, policy-making and ideology, particularly where established models are treated as authoritative.
Its defining features include the following.
First, the primacy of theory over observation.
Top-down thinking assumes that the underlying model is broadly correct. Empirical data is used mainly to illustrate or validate the theory rather than to test whether it holds in practice.
Second, selective use of evidence.
Evidence is filtered through the initial proposition. Supporting examples are highlighted, while anomalies are treated as temporary, exceptional or the result of “distortions” rather than as reasons to question the framework itself.
Third, resistance to falsification.
When outcomes contradict predictions, top-down thinking tends to adjust assumptions rather than abandon the model. This can lead to increasingly complex explanations that protect the original proposition from challenge.
Fourth, authority and consensus as validation.
Top-down reasoning often relies on expert consensus, institutional endorsement or established orthodoxy as substitutes for empirical proof. Models are defended because they are standard, not because they work.
Fifth, policy rigidity.
Because conclusions are anchored in prior beliefs, top-down thinking can justify persistent policy failure. If the theory says a policy must work, then negative outcomes are blamed on implementation, behaviour or insufficient commitment rather than on the idea itself.
From a Funding the Future perspective, top-down thinking explains why discredited ideas, such as austerity, NAIRU or market self-correction, continue to dominate policy long after evidence of harm has accumulated. The theory is defended first; reality is accommodated later, if at all.
Top-down thinking is not inherently illegitimate, but it becomes dangerous when it is insulated from evidence and used to impose social costs in the name of theoretical necessity.
See also bottom-up thinking.
Bottom-up thinking is a mode of reasoning that begins with observation, evidence and lived outcomes, and then seeks to develop explanations that fit the facts. Patterns are inferred from reality rather than imposed upon it.
This approach treats theory as provisional and revisable.
Its defining features include the following.
First, evidence precedes explanation.
Bottom-up thinking starts with what is actually happening, whether in data, institutions or lived experience, and asks why. Theory emerges as a tool to explain observed outcomes, not as a constraint on what may be seen.
Second, openness to contradiction.
Evidence that does not fit existing explanations is treated as informative rather than inconvenient. Anomalies prompt revision of assumptions rather than defensive elaboration.
Third, pluralism and humility.
Bottom-up approaches accept uncertainty and complexity. Multiple explanations may coexist, and confidence is proportional to the strength and consistency of evidence.
Fourth, adaptability in policy.
Because explanations are grounded in outcomes, bottom-up thinking supports policy learning. When interventions fail, the response is to reassess the framework rather than to blame those affected.
Fifth, alignment with democratic accountability.
Bottom-up thinking takes social consequences seriously. If policies produce insecurity, inequality or harm, those outcomes are evidence that something is wrong, not proof that people have failed to adjust.
From a Funding the Future perspective, bottom-up thinking underpins approaches such as Modern Monetary Theory, which begins with how money actually works and builds theory from observed institutional reality rather than from abstract assumptions.
A healthy political economy requires both imagination and discipline, but theory must remain accountable to evidence. Bottom-up thinking ensures that economics serves society, rather than demanding that society conform to economics.
See also top-down thinking.
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Here’s an interesting but long and admittedly technical paper that takes apart how so many economic assumptions then result in a load of skewed effort to justify the assumptions. Even Keynes doesn’t escape this accusation!
https://tools.bard.edu/wwwmedia/resources/files/928/WP%2016%20-%20Unemployment%20in%20Capitalist%20Economics%20-%20Forstater.pdf
A coherent diagnosis of the over centralised state we are living in.
I’m afraid that with homeworking, at the local level, top down is even worse with people managing people and assets they hardly ever interact with anymore.
Meeting today – elec prices for industry or, where top down thinking meets empirical evidence/bottom up. The EU (& I’d guess the UK gov) is pervaded with top-down coupled to cognitive dissonance (which you need when the evidence shows you are wrong – I’m looking @ you Mrs X – head of CEER),
🙂
You cannot be a top down thinker wthout having cognitive dissonance
People at the bottom, who ride omnibuses, haven’t read any of the relevant studies, but they are amazingly good at detecting top-down thinking when they encounter it.
They have a variety of words for it, few are printable.
Top-down thinkers tend to avoid omnibus passengers, they are scared of them.
Very occasionally, the top-down thinker does meet those at the bottom. Those encounters, very occasionally, can be transformative.
For example, Andy Burnham, then the Labour Sports Minister, met the “Hillsborough” campaigners en masse at Anfield football ground, on
15th April 2009
https://www.liverpoolecho.co.uk/news/liverpool-news/hillsborough-andy-burnham-mp-major-3334516
I think that made a difference to him.
We need more painful encounters between the policy-makers and ideologues at the top, and the creative, imaginative communities their policies are tearing apart – locally, nationally and internationally.
Much to agree with
Bottoms up! I rarely find neat answers satisfactory.
Neither top down nor bottom up thinking is better than the other, both having advantages and disadvantages. The classifications given in the blog don’t accord with my experience. Top down is no more resistant to falsification than bottom up; it’s just that the type of error you are likely to fall into is different.
Top down tends to be fast giving you a superficial facility that’s often dangerously relied on. Bottom up is slower and is prone to false conclusions due to insufficient (or poor quality) data. It’s liable to conclude black swans don’t exist and synthesise a hypothesis that excludes them. I’d say Richard is right when he talks about top down being prone to cognitive dissonance, but holding multiple contradictory theories in your head at any time is common to both modes of thinking when trying to understand something new. Both the tendencies to run with superficiality and to use insufficient data are down to time poverty.
Here’s a possible example of poor data use in bottom-up that Richard himself has declared multiple times: that acceptance of money is validated through tax. It can be true but it’s not definitional. Other things can do it too. This example is used in MMT because that’s part of an American founding narrative. In the US colonial era, where Britain wanted all money to be controlled from London, colonists were forbidden to coin their own money. So the colonial governments printed their own notes instead. They weren’t always well accepted and they would trade at a lower rate. So the colony governments created taxes, often poll taxes, which had to be paid in colonial notes. So can the acceptance be forced by tax reliance? Absolutely. But bottom up thinking has created the theory that’s necessary. It ignores different mechanisms like legal tender which can do the same job. Top down thinking asks the question what makes people accept money, and that gives you a far wider set of answers, perhaps allowing you to take eurodollars into account, which aren’t backed by the Fed and have no legal force behind them. Yet there are $13tr of them in the global market. Top-down thinking won’t immediately answer that question, but it recognizes the need for one, The bottom up idea: I already know it’s tax, fails to ask it.
I think you misunderstand the disconnect in the history of money.
That pre 1971 is not related to that post 1971.
The breaking of the link without gold was vital.
So is the breaking with history you alluded to to.
Fiat currency reinvented money, in its entirety. The new money we have has nothing to do with colonialism, etc. it is all about the peer of regulation that leads to money creation – and yes, those petrodollars are money, as much as any other, and are technically a claim on the US as much as any other dollar. We disagree on what money is. I have followed the evidence. I am not at all sure you are.
I think the plan is not complete until risk assessments and mitigations are carried out and a procedures are developed to mitigate failures. This must be done by the people involved.
I promised you a summary of the core idea in the book ‘Radical Abundance’.
I have done that on Canva here: https://www.canva.com/design/DAG7xRBI530/IXt25lBMEEFObTRPaC8Z1Q/edit?utm_content=DAG7xRBI530&utm_campaign=designshare&utm_medium=link2&utm_source=sharebutton,
but also found a pretty neat summary on their website here: https://www.in-abundance.org/what-is-a-public-commons-parntership
I don’t seem to be able to reply on the original post (‘Where’s the plan’) so here seemed the next most appropriate spot.
No need to publish this if its not appropriate.
Cheers,
Kirsten
Thanks
The Canva only works as far as I can see for those with an account.
I note the second version. It is riddled with massive risk of conflict, and maybe capture because of the confused structure.
But I also struggle to think where this fits into the economy. In particular, what types of business and on what scale? The complexity is going to be very costly, but the required scale seems to be very small and local. How is this reconciled?