The Politics of Australia’s Economic Development

Abstract

This chapter reviews the history of state–economy relations in Australia since the late nineteenth century. Although Australia is typically categorized as a liberal market economy, this chapter argues that the state has been of central importance in shaping and managing the Australian economy over time. The chapter outlines the changing role of the state in the Australian economy, a process typically shaped by alterations to state–economy relations following major economic crises, such as the Depressions of the 1890s and 1930s, as well as the stagflationary crisis of the 1970s, which ushered in more market-based, neoliberal forms of economic policy. The chapter’s key argument for the contemporary era is that supply-side-focused neoliberal policies have run their course, and that a new demand-side policy focus aimed at dealing with weak aggregate demand, inequality, and flat wages is now required in order to spur aggregate demand and economic growth.