an expensive pointless contest of who can spend the most on spys in a an economy that has already been squeezed to the limit.
I'm not unsympathetic to your point of view. This can become quite irritating, if you let it. The trick is, not to let yourself get sucked into that endless loop of spy vs. spy. Play smarter. It's ironic that this topic is here now, because I am experiencing this very thing in my current game. Here is the situation, and what I am going to do about it.
After a few of those huge 'space opera' type games, I needed a break, and decided to start one of those simple games where I could just go and kick the crap out of something. I started a tiny/rare, one opponent game. Me, the Drengin vs. the Torians, with a few minors for flavor. The game was chugging along, as it does, when the Torians got cocky and declared war. I ramped up my tech output to sprint through those last two or three steps to the psionic beam, and a turn or two after I reached this, they dropped their first spy on my tech capital. I maxed out my espionage spending, and neutralized it. Another dropped. Got that one. Then another, then two more, on my labs. More often than not, the AI will give up, or lose interest, or whatever it does, fairly quickly. Not these guys. They are committed. But I am not going to get sucked in.
I am going to leave my espionage spending maxed out; but instead of going after their spies, I am going to stockpile mine. This game isn't going to last long enough for further research to be a factor. I shouldn't need too many agents, three or four should be more than plenty in this galaxy. I am going to target their economy- economic capital, stock markets, and any farming tiles. If you flood them with agents, they won't have time to respond before they are bankrupt, and everything in their world grinds to a halt. At this point, for all intents and purposes, the game is won. All that is left is to mop them up. And mop I will, for after all, I did start this game to kick the crap out of something.

the only 'good' thing I can think of at this point is maYbe for small maps???
This strat works for larger maps also; but of course you need more agents, and must pick your targets, as well as the time to strike wisely. Here is a link to a reply that I made to a post some time ago that illustrates this point. Reply #4 is the one that I am referring to, but the whole thread is pretty informative as to the nature and power of spies.
WWW Link